Short-term view limits long-term gains

18th September 2023

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Soben Managing Director, EMEA, Andrew Gallacher, comments on the impact of yet more delays to major UK infrastructure projects. 

Last week’s [14 Sep] news that the planned sections of HS2 North of Birmingham might not even go ahead was the latest of a series of heavy blows to hit UK construction this year. Announcement after announcement has put major infrastructure projects on hold, decimating order books and leaving some companies and individuals in precarious financial situations.

It was March 2023 when HS2 announced that the construction of the planned lines beyond Birmingham to Crewe and Manchester were to be delayed. Then in April, HS2 confirmed disturbing rumours that work to build the tunnel connecting Euston station and Old Oak Common in London could be pushed back to the 2040s, even as the two tunnel boring machines (TBMs) were being prepared for launch.

There was a second blow in March, too, at the hands of National Highways which put its Lower Thames Crossing on ice for two years, citing inflationary pressures and stakeholder concerns. Meanwhile, Transport for London, with its lower post-pandemic passenger numbers, has pushed back proposed projects such as Crossrail 2 and the Bakerloo Line extension on hold indefinitely.

The industry is really feeling the reverberations from these decisions now. Teams that had been beefed up to deal with forthcoming workloads are now being trimmed down. Specialist contractors who had full pipelines of work ahead of them now face the prospect of fighting against their peers to win contracts and maintain turnover. Materials suppliers and freight operators are downgrading their growth forecasts.

The longer-term effects are likely to be more dramatic.  While investing in infrastructure has always tended to boost economies and grow GDP, slashing investment in infrastructure will likely have the opposite effect. This will apply regionally, as well as nationally: investment in infrastructure in the North of England could have helped with the ‘levelling up’ agenda. Pulling the plug won’t.

Doing the sums

With a cost consultant’s hat on, it’s difficult to see how any of these delays will save money for the UK. Some materials costs may come down, but then others will rise. Fewer projects to bid for will mean more competition and possibly keener tender prices on certain elements, but the record number of insolvencies among construction companies right now is a counterbalance to that.

Then there’s the cost of the huge amount of waste that these delays will incur. Think of the hundreds and thousands of brains working on these projects which will now be deployed elsewhere, some of them onto projects overseas. It will take significant amounts of time for the next round of people to assimilate the knowledge needed to restart the projects and, inevitably, some information and granular detail will be lost altogether.

Experts such as the National Infrastructure Commission have long been telling the Government that stable and far-reaching pipelines of work are the way to boost productivity and innovation in our industry. Yet now companies like Soben, which had won infrastructure work now snatched from the table, must spend time and energy taking stock and formulating new strategies. We would much prefer to be lending our competence and brainpower to creating value for our national infrastructure projects and – ultimately – for the UK.










Andrew Gallacher

Managing Director EMEA

[email protected]

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