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NHS Project delays hold back stimulus plans

Plans to stimulate the flagging economy by bringing forward capital spending on public works are being undermined because existing projects are running into difficulties, research suggests.

Almost £1.7bn of health and education projects have been postponed in the past two months, despite government efforts to push money through.

The research, by Construction News, suggests the labour government will struggle to spend the £3bn it has brought forward to boost the economy. Dozens of projects have had to be put on hold, including 62 health schemes worth an estimated £1.3bn and 69 education projects worth £400m.

“The government is being held up by the procurement process,” said Allan Wilen, economics director at Glenigan, a construction information service. “There is capacity in the construction sector, but you have to make sure you’re putting up the right school in the right place.”

Instead of increased public sector expenditure offsetting flagging private investment, it appears that cancelled private schemes are holding back health and education projects. “If a planned housing estate is no longer going up, there’s no point in putting up a school either,” Mr Wilen said.

The Department of Health has already cut PFI hospital building from a projected £12bn in 2006 to £7.6bn currently. Some of the remaining schemes have been trimmed and others delayed by redesigns.

Glenigan data show that more than 1,200 building and civil engineering projects have been put on hold since the middle of October, worth an estimated £10.8bn.

http://www.ft.com/cms/s/0/2571a078-c727-11dd-97a5-000077b07658.html

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