Budget fears over DBFO - Christiani boss sees roads as easy target after research unit issues "Green Budget"

Alan Crane, md of Christiani & Nielsen, warned on Monday that the Labour Government could throw the design, build, finance and operate road programme into turmoil by scrapping all future schemes.

The biggest blow, Crane said, would be the abandonment of all Tranche 2 projects. The first three major schemes, all out to tender at the moment, have a total value of œ345 million.

Crane was speaking after hosting a breakfast meeting with Andrew Dilnot, director of the Institute for Fiscal Studies, the UK's leading independent economics research unit.

Dilnot was presenting his Green Budget, focusing on what Gordon Brown, the new Labour Chancellor of the Exchequer, is expected to do in his first Budget next month.

While the coming years hold a bright future for the construction industry's housebuilding sector, Crane reckoned, he said that prospects for the civil engineering sector were very worrying.

"Brown has said he will follow Kenneth Clarke's plans and that there will be no increase in public spending," said Crane.

"This is very worrying. Up to 15 years ago, six per cent of GDP was invested in public assets, then during Margaret Thatcher's time this fell to one per cent though the rest of Europe has stayed on a figure of six per cent.

"It means our asset base is reducing, as inflation is running at a higher figure than the rate of new investment.

"Brown has already said infrastructure investment should be in public transport rather than roads, and I would not be surprised if the DBFO programme in roads was reduced - all the signs are there."

Crane fears that the axe could fall on the three big Tranche 2 schemes now out to tender: the A21/A26/A27/A259 Weald & Downland, worth œ140 million; M6 Cumbria-Bradford, estimated at œ110 million; and the œ95 million A6/A43 South Midlands Network.

Civils groups would be hit by the further loss of all the other schemes in Tranche 2; five of the additional schemes still to be bid for have a total value of œ566 million.

"It's all to save money," said Crane. "The schemes currently being bid could be hit as Brown pulls the plug."

However, Crane said PFI would gather speed in both health and education. "Contractors would welcome such a movement forward," he said, "but remember they will not be public assets.

"We are on the highest tax level for 40 years, so where is the money going? It is not going into public investment. I'll tell you where it's going, into social security."