The Construction Products Association (CPA) expressed concern at chancellor Gordon Brown’s proposals to ease ring fencing in local government spending to help stave off big council tax rises.
CPA economics director Allan Willén said that the chancellor’s announcement in his budget preview today meant that cash previously targeted at local authorities capital projects might be used for “front line” expenditure, such as education and health sector pay rises.
“The Chancellor has announced that £360 million of local authority expenditure will be removed from ring-fencing constraints,” said Mr Willén. “This is likely to result in the diversion of funding away from repair, maintenance and improvement spending on schools, social housing and local roads, as councils seek to address more immediate political priorities.
The CPA is also concerned at the Chancellor’s decision to reallocate £512 million away from central government departments.
“It is not yet clear which departments will be affected, but to ensure delivery of the government programme of capital investment in public services it is vital that capital allocations made in the Spending Review are not reduced,” said Mr Willén. “There has been some progress recently in tackling the backlog of capital spending projects and we’re concerned that this may fall off in the run-up to the election.”
The CPA also raised concerns over the chancellor’s announcement of a change in maternity leave rules, which will allow the transfer of leave to the father, and the introduction of new anti-fraud measures for business. The organisation feared both could increase the construction products’ sectors costs and administrative burden.
However, the CPA approved of Mr Brown’s announcement that he was freezing main road fuel duties. “This is welcome given that haulage costs are already going to be pushed up next year by changes in the working time directive,” said Mr Willén.
The CPA also welcomed the chancellor’s news that the government was planning measures to ensure that EU directives are not “gold-plated” in the UK and to impose a similar tax regime on leasing as capital spending.
