Industry welcomes chancellor's £3bn public spending boost

Construction firms and trade bodies have welcomed the government’s move to bring forward £3bn of public sector spending, although some have questioned whether the measures announced by chancellor Alistair Darling will be enough to make a real difference to the industry.

Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering (ACE), said: "We welcome the bringing forward of £3bn of capital spending from 2010/2011 to be spent on housing and road projects though we had hoped for more. We look forward to seeing the detail of the projects being fast-tracked".

He added that the setting up of a lending panel to monitor loans to businesses and individuals was “a welcome step” in improving the flow of finance to business, but said it “does not go far enough”

He said: “Much more needs to be done to get the banks lending again. ACE wants the government to commit to encourage the recapitalised financial institutions to use part of their bail-out funds to support SME firms and large professional consultancy, engineering and contracting firms during this difficult time to ease the pressure on cash flow and mitigate potential insolvency within the sector. They are feeling the pain now and we need action now."

Adrian Ringrose, chief executive of Interserve, also welcomed the fast-tracked spending, which will be used in education, transport infrastructure and housing projects. He said: "We are pleased that the chancellor acknowledges the current economic imperative of investing in key public services. This will provide both a much-need short term fiscal stimulus and, provided that the investment is properly directed, deliver long-term improvements to the nation's infrastructure.

Graham Kean, head of public sector work at EC Harris, said: “The spiralling public sector borrowing requirement will inevitably place greater focus on driving the government's efficiency agenda. The challenge will be to ensure that spending has a real impact on service outcomes and delivers benefits on the ground – and across all elements within the business community – from international firms to SMEs."

"There will also be a need to streamline decision making at a local level to accelerate the pace at which capital projects are delivered and local supply-chains engaged.  This will have a positive impact on local economies.”