The Construction Leadership Council (CLC) has issued an open letter urging the next UK government to consider measures for enhancing construction productivity.
- Key recommendations include reviving private finance initiatives for public infrastructure projects, aimed at reducing government expenditure.
- The letter suggests an annual economic boost of £45 billion through proposed changes, including tax incentives and planning reforms.
- Calls for flexibility in fiscal rules are made to enable private finance in major infrastructure, reflecting past schemes like PFI.
- Predicted political shifts suggest these recommendations might align with the policies of an incoming Labour government.
The Construction Leadership Council (CLC), represented by industry-side chair Mark Reynolds, has formally addressed the future UK government through an open letter. This missive outlines strategic measures intended to enhance productivity within the construction sector, projecting a potential economic uplift of £45 billion annually. Among these measures is the revival of private finance for public infrastructure projects, a proposal aimed at keeping infrastructure costs off the government’s financial statements.
The document, endorsed by 16 CLC members, targets the leaderships of both the Conservative and Labour parties. Its essence is to offer what is termed as ‘non-partisan guidance’ to bridge the productivity gap and maximise the construction industry’s contribution to the national economy. Nevertheless, such guidance resembles traditional industry lobbying, calling for the implementation of a decade-long infrastructure plan, consistent application of the Construction Playbook, and reforms in prompt payment and planning.
Prominent within the letter is a solicitation for increased tax breaks dedicated to research and development. Further, it advocates for bolstering the build-to-rent sector by escalating subsidy levels between £9 billion and £14 billion. Notably, the letter also emphasizes the necessity for ‘flexibility in the fiscal rules’. This entails initiating dialogues with industries to further integrate private finance in delivering government projects, thereby achieving infrastructure objectives while maintaining fiscal prudence.
The context of this proposal is historically significant. Political forecasts suggest a probable transition to a Labour government post the 2024 general elections. Historically, Labour administrations have championed schemes akin to the Private Finance Initiative (PFI), which experienced a substantial expansion under the Blair/Brown era for diverse projects such as schools and hospitals. Over time, the pitfalls of these initiatives surfaced, revealing their costliness due to prolonged financial commitments.
Today, the political climate renders ‘private finance’ a contentious term. The preference has shifted towards using the regulated asset base (RAB) model, exemplified by the Thames Tideway super sewer project. RAB models allow for a sharing of construction and operational risks between investors and consumers, administratively lowering project costs. The Nuclear Energy (Financing) Act 2022 further illustrates this shift as it sets the stage for RAB models in projects like Sizewell C.
In conclusion, as the UK stands on the brink of potential political change, the CLC’s propositions underscore significant avenues for economic growth through strategic infrastructure funding methods.
The CLC’s recommendations present a blueprint for leveraging construction to drive UK economic growth amidst political transitions.
