UK Autumn Statement – does it deliver the pace of change needed?

25 November 2016
In the 2016 UK Autumn Statement, Chancellor of the Exchequer Philip Hammond said we need a step change. We question whether the measures will deliver the pace of change to provide the country with the necessary economic, environmental and social impact.
Phase 2 strengthening works below deck on the Hammersmith Flyover, London. © Daniel Shearing

Phase 2 strengthening works below deck on the Hammersmith Flyover, London. © Daniel Shearing

Mathew Riley. Ramboll

Mathew Riley

Managing Director, UK
T: +44 20 7631 5291

Matt Davies

Principal
T: +44 1312 972 650

Welcoming the National Productivity Investment Fund (NPIF)

The UK lags behind Germany and the US in productivity, each producing in four days what we do in five. In a bid to tackle this, Philip Hammond announced a new National Productivity Investment Fund (NPIF), providing £23 billion of additional spending. Focusing on transport, digital communications, R&D and housing, the NPIF is aimed at ensuring the UK’s economy is fit for the future.

Welcoming the focus to get our country in better shape to compete on the world stage, Mathew Riley, UK Managing Director comments “Disruptive technologies are upon us, for example we know that major car manufacturers are likely to stop producing new combustion engines within 5 years. Delivering quieter and low emission transport and big data will help us improve road capacity. The investment from the NPIF will help us ensure we have the technology to create solutions that solve tomorrow’s challenges”. However, innovation is not the only answer, agrees Mathew, who talked about our country’s major infrastructure projects “Our industry will be delivering nationally significant and complex infrastructure that requires collaboration and different thinking so that we help our clients to manage such projects effectively and efficiently”.

Considering the environmental benefits of the additional funding, Matt Davies, Environment & Health UK Managing Director adds, "The commitment to invest in research and development for science and technology innovation is a great step forward in not only boosting the UK economy but potentially bringing us closer to meeting environmental goals. We would like to see a focused strand of investment on decarbonisation and renewable technologies, and a commitment to provide access to the national grid.”

We need to accelerate development consent,

Matt Davies continues, "In delivering the new infrastructure fund, one of the key aims has to be a faster pace of delivery, which can be done through accelerating development consent orders and parliamentary bill processes - however this doesn't mean we need to cut planning and regulation corners.
Early and focused stakeholder consultation that focuses heavily on identifying common ground would ensure swift identification and resolution of the key issues. The shale fund is a good initiative but should be broadened to allow local communities to benefit from all forms of infrastructure development. It's a method that has occurred successfully in the renewables sector for some time and could fill the gap left by the withdrawal of EU structure funds."

Welcomed housing funding, but we need to build more quickly and cheaply


Speaking about the £2.3 billion by 2020-21 allocated to the new Housing Infrastructure Fund to be funded from the NPIF, Dan Harvey, Executive Director – Transport, comments “This is welcome investment to unlock local land for housing. The connection between housing and infrastructure will enable investment to build communities as well as homes”.

In Housing Mat MacNab, Executive Director – Buildings, warns that if these funds are not spent quickly and effectively then we will not see the pace of change essential to providing the country with the necessary economic and social impact. He added “there is little clarification so far, and we’ll only know the practical impact of these funds once we see the forthcoming Housing White Paper”.

Residential Director Tom Shaw believes that methods such as off-site manufacture could revolutionise house-building in the UK, and hopes the Housing White Paper coupled with the NPIF will bring new impetus to exploring different methods of building and construction to enable homes to be built at a lower cost and in shorter periods of time.

Matt Davies added “The Autumn Statement’s commitment to housing also needs to involve a commitment to delivering sustainable design. When planning new homes and communities, it is imperative we incorporate climate change resilience, a need highlighted by the recent floods, and design new neighbourhoods in a way that promotes positive environmental behaviour.

For example designing roads that could be used by driverless vehicles and planning infrastructure that encourages minimal car ownership will in turn will help address some of the air quality changes we are facing in the UK at the moment.

Brownfield sites should also be a key focus. By regenerating existing land we not only maximise land use but can help regenerate the surrounding communities, delivering wider societal benefits alongside housing that lead to connected and environmentally resilient urban environments.”

Transport infrastructure

There was welcome focus on transport infrastructure in this Autumn Statement. Dan Harvey commented, “Infrastructure spending is crucial in supporting wealth distribution, promoting economic development and environmental performance, and improving the livelihoods of people across the UK. It’s prioritisation in the Autumn Statement will provide a boost for the industry, but must be backed up by an effort to ensure such spending is done efficiently and effectively.”

As expected, we heard greater emphasis on the smaller projects as well as the larger and longer-term mega projects. Alan Pauling, Group Director – Transport, stated “Smaller, well planned, quickly delivered local projects provide visible solutions to long standing problems. Improving the efficiency of commuter routes will directly and immediately benefit productivity. The Chancellor’s commitment to dealing with pinch-points is also good news but if this only relates to the strategic road network that only covers 2% of England’s total road network. There are far more pinch-points off the SRN than on it.”

Flooding


After the significant flood events experienced across the country in recent years (and days), the announcement of spending on new flood defence schemes is positive. Luke Strickland, Associate in Environment & Health, commented “It’s encouraging to see the focus also changing to flood resilience, particularly for major infrastructure such as road and rail. The new funding is a step in the right direction, but as well as funding hard defences it would be beneficial to see the Government leading the way by investing in longer term catchment solutions such as natural flood management measures which provide multiple benefits. An emphasis on a portfolio of flood defence, flood resilience and wider climate change adaptation measures would go a long way to mitigate the increasing effects of flooding into the future.”

Was it enough?

Nathan Swankie, Principal – Environment & Health feels that the Autumn Statement could have been more supportive, particularly with regards to renewables and North Sea oil and gas investment. He says “Confirmation that the Carbon Price Floor freeze will only extend to the end of 2020 actually spells a good deal of uncertainty. Given that it can take a number of years for developers to get a scheme consented and commissioned this is likely to already be impeding investment. The lack of certainty about the future of the Carbon Price Floor means that some projects could become difficult to get off the ground as investors do not have the certainty required. The renewables industry is critical to achieving the UK’s transition to a low carbon economy, one of the government’s central energy objectives, so it is imperative that government lead the way in providing effective support.

The Statement represented a missed opportunity to support the offshore oil and gas industry, with commitments only made to measures that have already been committed. The industry is experiencing significant headwinds as a consequence of a prolonged low oil price environment and supportive measures would have been welcome in protecting this important aspect of the British economy.  The support for on-shore oil and gas development lies in stark contrast to measures for the North Sea – though this is unsurprising given the Government’s previous stated support for the onshore industry.”

Policy on energy and climate change within the Autumn Statement was noticeably light. It needs to be higher up the Government’s agenda, or the type of changes that need to be made simply cannot be. For example, a lack of clarity on how they are proposing to decarbonise heat only creates further uncertainty – how are they going to deal with this issue and when will the industry know?”

As always there are calls for more funding in particular areas and more detail and specific commitment into others. The beauty will be in the detail and the proof in the delivery that follows. We hope further clarity will be seen in the forthcoming Housing White Paper and Northern Powerhouse Strategy as examples. But as an industry, we can also rally and use our ingenuity to bring about the needed step change that the Chancellor called for.

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