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The building blocks of recovery; As the implications from last month's Budget become clearer, Simon Marks, partner at EC Harris in Birmingham, provides an analysis of the implications for built assets.

Byline: Simon Marks

Alistair Darling's overarching theme for the Budget was achieving efficiency savings while delivering better public service outcomes.

In the local government sector, this means creating additional efficiency gains by 2013/14 from back office services, IT and procurement and will require local authorities to adopt and implement fundamental business process change coupled with radical built-asset solutions.

The additional demand for a further pounds 16 billion of capital receipts from asset disposals for reinvestment into new programmes over three years from 2011/12 will also require local authorities to take a fundamental look at their property assets and make transformational changes in how they deliver frontline services.

Ultimately it will require authorities to work on built-asset solutions in an unprecedented manner.

In the housing sector, the Homes and Communities Agency's three main business drivers are dominant throughout Darling's Budget Report, namely: housing delivery; employment and training; and environmental sustainability.

The impact of the pounds 1 billion financial stimulus package that was announced - 50 per cent of which is earmarked to kick-start funds for new starts on site - will be completely dependent on flexibility.

To be effective, it will need to be able to effectively provide "gap or equity funding" - a matter the Treasury must get its head around quickly.

The rest of the package includes pounds 80 million extra for Homebuy Direct; which we estimate will support the purchase of some 4,000 standing stock units - not enough in our view.

The impact of the pounds 1 billion financial stimulus package to tackle carbon reduction on the housing sector is uncertain at this stage, but it does feel like Labour's eco town initiative has finally bitten the dust and turned into a meagre pounds 100 million council-led building programme.

Investment in education remains the Government's key priority and we are now part way through the largest capital investment programme in generations, which will last for some 20 years.

The Government's continued commitment should provide opportunities for small businesses and allow schools and children to benefit early from important projects.

The chancellor has placed built assets at the heart of nurturing economic recovery but to deliver meaningful economic stimulus we need to find a way for those firms whose traditional markets have evaporated to maximise their contribution to delivering in education and other public sector investment programmes.

If we crack this, it will head off the resource shortage, which is a root cause of cost inflation, and will allow the money that is being brought forward to deliver a genuine upturn in economic activity on a localised level across the Midlands. .


Simon Marks, of EC Harris Alistair Darling on Budget day
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Publication:The Birmingham Post (England)
Date:May 21, 2009
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