Why Budget changes bode well for water infrastructure
The construction industry won’t see an immediate boost from last month’s Budget. But new planning measures should make a difference, says Dean Stiles.Chancellor George Osborne's well-flagged Budget has little direct impact for construction projects in the water industry, but new planning measures do have long-term implications.
For the wider construction industry the Budget's support for apprenticeships and technical universities could provide much-needed help to close the industry's skills gap.
In terms of immediate spending, the construction industry is unlikely to see much of a boost, as was expected, despite investment in rail and other projects.
The Government's plan to cut the cost of public construction projects by a fifth through standardising buildings was published alongside the Budget. In its 'Plan for Growth' the Government says it would introduce "new models of procurement" and cut out bespoke design in the public sector.
The document pledged to "reform the way in which [the Government] procures public sector construction and infrastructure to reduce costs by up to 20%. This will include measures to encourage standardisation rather than bespoke designs, setting clear criteria for asset performance and introducing new models of procurement."
Stephen Ratcliffe, director of the UK Contractors' Group, questioned how the cut will be translated into reality, but says that the pipeline announcement would give the industry more certainty and stability. He says: "It was our number one priority".
The Government has been putting pressure on suppliers to reduce costs and Paul Morrell, the chief construction adviser, has told the Government that the industry can cut prices by up to 30% if it works in a more integrated way. This is the first time that the Government has put a figure on how much it wants construction to cut costs by, as well as explicitly linking savings to standardisation.
"One of the big unanswered questions relates to planning and how NIMBYs unleashed by localism might delay the actual construction that the country can afford to build," says Simon Rawlinson, head of strategic research and insight at EC Harris. But the Chancellor gave clear hints of a redress of balance back to development through the presumption to build, he says.
The Budget included a number of changes to planning laws, most of which had been widely trailed in advance. The most surprising was a pledge to guarantee a decision on all planning applications, including appeals, within one year. Ian Tant, partner at Barton Willmore, says it was unclear how the Government would achieve this without reducing the six months that developers are given to pull together appeals. "There could be a sting in the tail here," he says.
Osborne repeated the Government's pledge to introduce a presumption in favour of sustainable development, with the Secretary of State for Communities and Local Government, Eric Pickles expected to publish more detail shortly.
Ten local authorities are to pilot a new wave of enterprise zones, which will see greatly reduced planning regulations. Other councils will be encouraged to bid to create 21 zones in total.
Local authorities will also now be free to set the level of development required from brownfield land, instead of the current blanket 60% requirement.
But while most people are busy anticipating the imminent demise of the Infrastructure Planning Commission, its jurisdiction will be extended from 6 April this year to include applications relating to large wastewater treatment plants. Meanwhile, the Localism Bill proposes the abolition of the IPC, with the Secretary of State making decisions on Nationally Significant Infrastructure in the future.
The Government is bringing forward new regulations under the Planning Act 2008 that, from 6 April classify certain proposals for the construction or alteration of waste water treatment plants as Nationally Significant Infrastructure Projects. This change will affect all proposals for the construction of new facilities that will have a capacity exceeding a population equivalent of 500,000. Likewise any alteration to a plant that increases its capacity by more than a population equivalent of 500,000 is caught. The changes only apply in England.
"The implication of this change is that local planning authorities will lose their jurisdiction over such projects, which will from 6 April be determined by IPC under the development consent regime," says Trevor Ivory at Howes Percival LLP.
The IPC was set up under the Planning Act 2008 and is currently handling its first batch of applications. Under the Localism Bill, the IPC will be transferred into a new Major Infrastructure Planning Unit of the Planning Inspectorate and will no longer determine any development consent applications. Instead, it will report to the Secretary of State who will take the final decision on all applications himself.
The precise meaning of a 500,000 population equivalent requires reference to existing legislation but if proposals exceed this threshold, they will no longer face the challenges of securing consent for large infrastructure projects under localism, says Ivory. "Instead, they will be subject to the development consent regime.
"This is likely to be welcomed by anyone promoting such projects, not least because the development consent is much more than a planning permission; it rolls many of the regulatory consents required for such facilities into a single application and can even include compulsory purchase powers in some circumstances," he says.
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