Reeves’ first Budget must back growth ambitions with infrastructure spending

Anyone who went to, or read about, last month’s Labour Party conference will have picked up loud and clear the message that the new government wants to drive up economic growth by unleashing a new housebuilding boom. On the face of it this is great news, but ministers need to acknowledge that a single sector cannot by itself deliver sustained growth that enjoys lasting public support.

At the moment there is an apparent disconnect between this ambition for housing-led growth and plans to balance the books by cutting spending on infrastructure. Delays to road schemes announced by the chancellor earlier in the summer and the prime minister’s warnings about “unpopular decisions” to come has got the construction sector concerned that further project cancellations may be coming in this month’s Budget.

Given this backdrop, it is very important to recognise that, without supporting infrastructure – and in particular better road and rail connections and capacity – development of new housing at any scale will be unsustainable and may well prove to be unpopular. Put simply, there will be no housing-led growth without infrastructure growth – the two must go hand in hand.

As an industry, we know that improvements are needed when it comes to delivering new infrastructure on time and on budget. The government knows this too; Labour’s plan to merge the National Infrastructure Commission and the Infrastructure and Projects Authority into a new National Infrastructure and Service Transformation Authority (NISTA) is meant to be a big part of improving performance in these areas. But cancelling projects, as may happen in the Budget, may be entirely self-defeating.

Rachel Reeves’s upcoming Budget presents an opportunity for the government to show clear support for transport, water, energy and wider infrastructure that is vital to underpin growth

The cumulative impact of such decisions undermines confidence in the industry, affecting recruitment, retention and training. It also affects decisions about investments in the innovative new technologies and techniques that will ultimately improve financial performance, project delivery and environmental sustainability in our sector.

Rachel Reeves’s upcoming Budget presents an opportunity for the government to show clear support for transport, water, energy and wider infrastructure that is vital to underpin growth. Giving greater certainty that the government is committed in these areas will help to rebuild confidence and start to improve performance in the infrastructure sector.

In addition, we also need greater clarity on how the NISTA will operate in practice and what the pipeline of projects it will oversee looks like.

However, infrastructure investment is not the only issue that needs to be addressed by government this autumn. Further announcements around planning and regulation are also needed.

The government has made clear that it understands that economic growth led by investments in housing and places – and in infrastructure – will not happen unless the planning system is significantly more nimble and responsive. I strongly welcome the mission-led approach to this area and the proposals already announced for reform.

Skills will also be a huge hurdle. I would urge the government to go a lot further than the funding for 300 new planning officers already announced and suggest it commits to directly providing long-term support to local and regional authorities that is ring-fenced for rebuilding planning departments. The financial burden does not have to sit solely with the public purse though – the consultation on the National Planning Policy Framework raised the potential for an increase in fees payable by developers to support the planning reform.

However, the consultation is just seeking views at this point, so an increase is not guaranteed and, if approved, it will take time to see the benefits within planning departments.

A closely related point is that the resourcing provided to regulators, especially the Environment Agency, needs to be sufficient to ensure that they are able to make their contribution to planning and permitting regimes in good time. There is plenty of anecdotal evidence that delays in the system are in part caused by shortages of staff available to attend planning hearings or to reach decisions about permits.

We all know that the government is facing financial constraints and that tough choices are needed

In the short term this could be addressed via additional funding in the Budget, and again over the long term by higher fees charged to developers.

We all know that the government is facing financial constraints and that tough choices are needed. There is some speculation that the chancellor will amend her fiscal rules to make investments in the nation’s fabric easier.

Whether that happens or not, if ministers want to deliver growth, they need to invest enough in new infrastructure to stimulate it rather than stifle it.

Richard Risdon is managing director for UK and Europe at Mott MacDonald