Government review to seek infrastructure savings

A wide ranging review into why the cost of major infrastructure projects is so much higher in the UK than among some of its key competitors has been launched by the government.

Terry Hill, until recently chairman of Arup and who now heads its transport division is to examine almost everything short of sources of finance that affects the cost of civil engineering from water, energy and other utilities to roads, rail and other forms of big infrastructure.

Mr Hill said UK construction costs are unquestionably higher than those in key continental competitors such Germany, France and Spain. There was, he said, a debate about the size of the gap – some studies pointing to a 10 to 20 per cent difference, others suggesting double the cost on particular projects.

“But there is no question that they are higher and our goal is to find ways of reducing them”. That would range from the cost of plant, labour and materials, to the costs of design, procurement and all the regulation, from health and safety to planning and standard setting, he said.

With total spending on infrastructure expected to reach about £400bn over the next five years or so, “even a relatively modest 10 per cent saving would be a serious sum,” he said.

The study is being conducted under the auspices of Infrastructure UK, the Treasury based body on whose advisory council Mr Hill already sits. It is bringing in support from a key range of figures in the construction industry.

One allegation he would like to get to the bottom of, he said, is that EU procurement rules are applied in a more gold-plated and expensive way in the UK than in other countries. “You hear anecdotes, but the rules are the same everywhere, so that shouldn’t happen”.

Initial findings will play in to the autumn’s comprehensive spending review. But work will continue until at least the end of the year and possibly later if the review finds that legislative or regulatory changes are needed..