3rd July 2020
A ‘New Deal’ for Britain?

As the UK tentatively emerges from lockdown, its citizens are looking out at a vastly different landscape. In just months, thousands have tragically lost their lives, while workers up and down the country have found themselves on the breadline.

Now, Boris Johnson has announced a £5bn plan to save Britain’s economy, which shrank by a record 20.4% in April[1]. In a speech in the West Midlands, he likened the “ambitious” plan to Franklin D. Roosevelt’s ‘New Deal’ programme, implemented in the 1930s to help the US recover from the Great Depression. Nearly a century later, the prime minister says he wants to use the coronavirus crisis as an opportunity “to build the homes, to fix the NHS, to tackle the skills crisis, to mend the indefensible gap in opportunity and productivity and connectivity between the regions of the UK[2].”

What will the funding be used for?

Mr Johnson’s pledge to “build build build” effectively puts construction at the heart of the government’s economic strategy, with the money to be used to fund infrastructure projects across the UK:

  • £1.5bn for hospital maintenance, eradicating mental health dormitories, enabling hospital building, and improving A&E capacity;
  • £100m this year for 29 road projects, as well as £10m to unblock Manchester’s rail bottle neck;
  • Over £1bn to fund the first 50 projects of a new, 10-year school rebuilding programme.
  • £560m and £200m for repairs and upgrades to schools and FE colleges respectively this year;
  • £142m for digital upgrades and maintenance to around 100 court rooms this year, £83m for prison maintenance, and £60m for temporary prison places, creating thousands of new jobs;
  • £900m for a range of ‘shovel ready’ local growth projects in England throughout this and next year, as well as £96m to accelerate investment in town centres and high streets.

Not without its critics

It’s clear that any plan for economic recovery from the COVID-19 pandemic is going to have its critics, with the stakes so high for everybody involved. Mr Johnson’s announcement has attracted comments from far and wide, with the Labour Party denouncing the PM’s lack of focus on saving jobs. Labour Party leader, Sir Keir Starmer, said it “was not much of a deal and not much that’s new[3].”

Meanwhile, Scottish First Minister Nicola Sturgeon has declared herself “extremely underwhelmed” by the announcement, which she said was “simply shuffling around money that was already in the system[4].”

What does it mean for the construction industry?

The plan has been broadly welcomed across the industry. Chief executive of Balfour Beatty, Leo Quinn, spoke for many as he said: “The prime minister’s commitment to accelerate the UK’s long-term infrastructure pipeline is a critical factor for the country’s recovery. 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.”

Meanwhile, chief executive of Mace Group, Mark Reynolds, added: “The prime minister has set out the grand scale of his ambitions, and it is clear that we have a huge opportunity as we work to ‘build ourselves back to health’. It is vital that we do everything we can to ensure this promised historic wave of investment will actually deliver the economic growth we so desperately need.”

Some industry stakeholders have reacted more cautiously to the announcement, reserving judgement until some of Mr Johnson’s promises are borne out in reality. For example, Jon Hart, infrastructure partner at Pisent Masons, stated: “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[5].”

A situation to be monitored

The government’s clear commitment to and prioritisation of UK construction can only be positive going forwards, demonstrating its acknowledgement of the critical role the construction industry plays in the country’s economy.

What remains to be seen, however, is how these ambitious promises will translate to reality. With speed a major factor in the prime minister’s plans, the delivery of the promised infrastructure projects to deadline will clearly be more difficult while stringent social distancing rules remain in place on sites. With so much at stake, we’ll certainly be monitoring the situation closely at Focus over the coming months.