Out-Law News | 14 Aug 2014 | 10:05 am | 2 min. read
Transport infrastructure expert Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that the industry is better prepared than it has been previously to deal with the projected "boom" in construction activity.
"Skill shortages in boom times have been a perennial problem of the UK construction industry and the risk is well recognised now," Twist said. "HS2, Network Rail’s electrification programme, and the Highways Agency’s five year investment programme will present a challenge, especially when added to a likely nuclear new build programme. But this time we should be better placed to accommodate an increase in activity because it is one that is being anticipated and can be planned for."
Twist was commenting after KPMG highlighted that 57% of the total forecast expenditure on all central and local government construction projects in the coming years can be attributed to transport projects.
KPMG's report looks ahead to projected government project expenditure during the 2014-16 period, the 2016-20 period and from 2020 beyond. It identified 1,886 projects in the pipeline with a total of £116 billion expected to be spent. For transport projects alone, forecast spending is £66.2bn, with more than a third of that expected to be spent on delivering phase one of High Speed 2 (HS2).
However, Twist said that KPMG's breakdown did not include the £38 billion that has been committed for investment by Network Rail between 2014-19. He said inclusion of those figures, despite the fact Network Rail’s borrowings are in future going to be classified as government borrowings by the Office for National Statistics, serves to further highlight "the dominance of transport spending in the UK government’s construction pipeline". Network Rail is to be classed as a public body from next month.
"The Coalition stated from day on that there needed to be a rebalancing of capital expenditure away from social infrastructure and towards economic infrastructure," Twist said. "In the early years this seemed to mean a reduction in capital expenditure on schools and hospitals etc., with no concomitant increase in spend on transport and energy. That has now changed, and there is a very clear plan to spend very large sums of public money on road and rail."
Among the transport projects accounted for in KPMG's report is the rollout of phase 1 of the HS2 proposals, which concerns the construction of a new high speed rail line between London and Birmingham by 2026. A proposed second phase connecting the line to Manchester, Leeds and Heathrow Airport is scheduled to follow by 2033.
HS2, together with the completion of the Crossrail project in greater London, further plans to improve the rest of the road and rail networks and other construction projects in other sectors will result in a high demand for skilled staff, Twist said. However, he said that the industry should be better placed to handle the anticipated rise in activity.
"HS2 is only scheduled to start in earnest as Crossrail completes and the Highways Agency has now joined Network Rail in running five year investment programmes rather than, as previously, operating on an annual cash spend basis. So there is plenty of opportunity for the construction industry to gear up for a predicable long term increase in activity, something that the HS2 Growth Task Force Report encourages it to do," he said.
"The industry has a waited a long time for the government’s much trumpeted increase in infrastructure investment to materialise. There should be no excuses if the sector is not ready to cope," Twist said.