Tuesday 30 June 2020 2:24 pm

Industry reacts as Boris Johnson lays out 'New Deal' recovery plan

Boris Johnson has today laid out his vision for rebuilding the UK after the coronavirus pandemic, pledging to “build build build” to get Britain back on its feet.

Citing US president Franklin D Roosevelt’s “New Deal” as a model for the plan, the prime minister unveiled £5bn in infrastructure investment and promised to “scythe through red tape” to get construction moving.

The UK’s recent record in delivering large infrastructure projects leaves a lot to be desired, and though industry reacted positively to the announcement, there was some scepticism over the details.

Infrastructure partner at law firm Pinsent Masons, Jon Hart, said: “These are big commitments with, on the face of it, some eye-catching procurement opportunities. 

“There simply aren’t enough ‘shovel ready’ projects out there and it remains to be seen what this announcement will mean in practice”.

Hart said it was crucial for the government to tackle the problem of how it procures projects if the scheme was to be a success.

“It will be interesting to see how tendering processes can be sped up and how the public sector capacity gap within government for procuring schemes, when coupled with the industry’s own skills shortage is going to be addressed”, he added.

Programme should be ‘even more ambitious’

KPMG’s head of infrastructure Jan Crosby said that although it seems like a lot of money, £5bn does not “go very far” when broken down into individual projects.

He said: “The programme should be even more ambitious – much larger and focussed on other areas that also need levelling up – social housing; communities and high streets, digital infrastructure, championing accelerator infrastructure for the creation of new export industries”.

Jasmine Whitbread of London First agreed, saying that the pledges needed to be accompanied by an “ambitious national infrastructure strategy”.

“The Prime Minister is expressing the right sentiments on infrastructure projects, and focusing on the long-term health of the nation.

“The ambitious tones in the speech must now must be matched by an equally ambitious national infrastructure strategy, that can help deliver major transformative projects such as HS2 and Crossrail 2 and demonstrate the commitments to levelling-up the country”.

Miles Celic, chief executive of financial services body The City UK said that financial and professional services would be critical to the success of the plan.

“In this next phase of building back the economy, it will be instrumental in providing the investment needed to fuel essential growth, helping SMEs and communities build and level up across the country to enable the economy to bounce back”, he said.

“It’s clear that the UK economy is in urgent need of an infrastructure upgrade.

“High on the priority list must be boosting regional productivity and interconnectivity. Investment in infrastructure – both digital and physical – will be key to this”, he added.

Plan gets ‘one very important thing right’

Brendan Sharkey, head of construction and real estate at MHA MacIntyre Hudson, praised the plan for its focus on delivering project opportunities for SMEs.

“The Prime Minister’s announcement today might not reach the heights of Roosevelt’s new deal but it still gets one very important thing right: it focuses on smaller local projects like schools, hospitals and high streets that can be delivered quickly”, he said. 

“This is exactly what we need to keep work flowing to the sector and to shore up the future of SME construction firms. 

“The smaller the project the quicker it can get up and running, helping to revive the sector and prevent a spike in unemployment”, he finished.

Yesterday it was revealed that a £1bn fund for building new schools and further education facilities would be a part of the project.

The first 50 projects in the 10-year programme are set to be announced, and will include substantial investment in less well off areas in the north and Midlands.

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Leo Quinn, chief executive of construction giant Balfour Beatty, said: “As well as stimulating regional and national economies, it will generate vast employment opportunities across the country and help provide our younger generations with employable skills. 

“Without this, following the fall-out from COVID-19, we could see widespread structural unemployment issues”.

Housing ‘a pillar’ of the deal

Housing developers could be among the biggest winners from today’s announcement, as Johnson set out plans for an overhaul of the current planning system in order to make building new houses easier.

“Decade after decade where we have failed to build enough homes,” he said.

“We will build fantastic new homes in brownfield sites and other areas.

“We will address that intergenerational injustice and help people get on the housing ladder in a way their parents and grandparents could.”

Marc von Grundherr, director of lettings and estate agent Benham and Reeves commented:  

“Like many areas of life, the severe lack of homes being built has understandably taken a back seat. 

“However, it now stands as one of the pillars on which the Government is forming its economic recovery plan. Hopefully, this added emphasis on such a burning issue will result in some action and this will be nothing but positive for the UK property market”. 

Former RICS chairman Jeremy Leaf said that though the plans were welcome further detail on the scheme was needed.

“So many of the larger schemes in particular are mired in planning or lending red tape so certainly the concentration on infrastructure will help to release many from that log jam by improving connectivity”, he said.

‘Essential pieces of puzzle’ for regional transport

Transport for the North’s chief executive Barry White said that the plan showed Johnson’s continuing commitment to levelling up the UK.

“The road and rail schemes supported in today’s announcement are essential pieces of the puzzle for improving connectivity across our region”, he said.

“They must be supported by commitment to both HS2 and Northern Powerhouse Rail in full, as well as the Northern Infrastructure Pipeline projects we are recommending”.

Others in the transport industry were less enthusiastic, with Darren Caplan of the Railway Industry Association welcoming the sentiments “but disappointed by the lack of specific new rail projects the government plans to speed up”.

“We urge the government to announce in the coming weeks a clear pipeline of accelerated work it will support across the country to deliver economic growth, investment and jobs”, he said..