Ministers warned not to throw cash at infrastructure projects
Ministers must avoid throwing billions of pounds at infrastructure projects to create a stimulus for the post-Covid economy, according to a construction industry veteran.
Keith Clarke, the former chief executive of engineering firm Atkins, says the Government can create a better legacy for the construction industry with investment upgrades to schools, hospitals and other projects.
The construction sector has suffered financially since the London Olympics. After being awarded contracts boasting healthy profit margins in the run-up to the 2012 Games, many firms accepted less profitable projects to maintain revenues.
Some believe that fostered a culture of “lowballing” estimates among contractors. Carillion’s collapse at the start of 2018 prompted greater scrutiny of the sector’s finances and in particular the need for companies to pay their suppliers on time.
“With all this going on [the Covid-19 crisis], there is going to be an economic stimulus for construction,” said Mr Clarke, who led Atkins for almost eight years. But instead of pulling forward “shovel ready” projects, he said, “you should be retrofitting all your schools now. Not newbuilds”.
“You don’t get ribbons to cut. But if you are not maintaining your existing assets, you are throwing money away before you build new ones.”
Mr Clarke, chairman of Swansea’s Tidal Lagoon project, said that “retrofitting” buildings would also provide a platform for builders to meet climate change objectives. “This is a massive opportunity to have the Treasury put conditions on what it funds. You do the inconvenient. You concentrate on retrofit. You don’t rush off and build stuff that is in the pipeline and pull it forward – that is making you do stuff that was a good idea five years ago.”
Building awards fell 16pc in April compared with the previous year, according to Barbour ABI. Tom Hall, chief economist at Barbour ABI and AMA Research, said: “We expected a large fall in contract awards for April. However, we are seeing increasing on-site activity as large projects reopen. The infrastructure sector has been less impacted than other sectors.”
