Budget 2017: Construction skills funding commitment welcomed ahead of Brexit labour shortages

Out-Law News | 23 Nov 2017 | 4:09 pm | 2 min. read

The government's funding commitments on digital and construction skills will be welcomed by infrastructure firms, although answers are needed urgently on continued access to EU labour, an expert has said.

Nick Ogden of Pinsent Masons, the law firm behind Out-Law.com, was also disappointed by "a lack of any suggestion" in this week's Budget statement on "how to create better opportunity for private investment in infrastructure, especially those insurance and pension funds looking for assets to finance to deliver long term returns".

"The UK once led the world at looking at innovative approaches to funding infrastructure investments," he said.

"The chancellor's commitment to raising productivity should be good news for infrastructure as the government recognises the need for world-class infrastructure to help reverse the declining levels," he said.

The Budget announcement contained a £34 million investment in teaching construction skills, with bricklaying and plastering explicitly mentioned. A further £30m will be invested in digital courses using artificial intelligence (AI).

Both funding streams will precede the launch of a planned national retraining scheme, which will be overseen by the government, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI). These bodies will work together to decide on future areas of the economy where new skills and training courses are needed.

In a report, published in March, construction consultancy Arcadis warned that the UK would need as many as 400,000 new construction workers every year until 2021 if it was to be able to deliver all the planned projects in the National Infrastructure and Construction Pipeline (NICP), even before taking workforce attrition and Brexit-related immigration issues into account. Firms are already struggling to recruit people with the skills required for innovative infrastructure technology projects, according to a recent report by Pinsent Masons.

"A drive to improve digital and construction skills is very positive for infrastructure, as we increasingly move towards a technology-heavy sector," Ogden said. "However, with around one in 10 construction workers coming from the EU and low unemployment levels, the industry desperately needs answers on access to EU labour."

Infrastructure-related announcements made by the chancellor in his Budget speech were particularly focused on housing, regional transport, productivity and devolution. There was also a mention of £10 billion worth of increased capital investment for the NHS over the life of the next parliament, alongside announcements related to NHS operating budgets.

"This probably is a tie-in to the long-awaited 'Project Phoenix', on releasing NHS-owned land and buildings for commercial use, but as always the devil is going to be in the detail as to how the headline numbers for funds – devolved or otherwise – are converted into 'real' projects," said infrastructure law expert Jon Hart of Pinsent Masons.

"This time last year we were promised the 'pipeline' of new PF2-funded projects. This appears to have been forgotten, overlooked or else diverted away. It does highlight, however, the shifting sands upon which infrastructure priorities are being developed in very difficult circumstances," he said.

The government's Infrastructure and Projects Authority is due to publish an update to the NICP next month. The NICP sets out planned investment in infrastructure, across both the public and private sectors.

The chancellor also used his speech to set out the government's support for recommendations made by the National Infrastructure Commission (NIC) on upgrading the area between Oxford and Cambridge with housing, transport links and supporting infrastructure. An unspecified amount of government funding will be made available for improved transport links, including setting up a new 'East West Rail Company' to speed up work on the rail link between Bedford and Cambridge and completing the rail links between Oxford and Bedford and Aylesbury and Milton Keynes.

The government will allocate £300m towards ensuring that HS2-related infrastructure can accommodate future rail services delivered as part of devolved northern and Midlands transport plans. It will also allocate £337m from the Northern Powerhouse Investment Fund to replace rolling stock on the Tyne and Wear Metro with modern, energy-efficient trains. A new £1.7bn competitive 'Transforming Cities' Fund, announced earlier this week, will be used to deliver transport improvements in the English regions.