Plan to boost government spending is no quick fix - Raynsford

A government plan to keep the construction sector afloat by taking cash from future budgets to boost public spending will not be a quick fix, former construction minister Nick Raynsford has warned.

Raynsford, who is to head up a new economic council to advise the government on which areas of the industry are most affected by the downturn, called for a careful approach to boosting spending in the areas it was most needed, across a wide range of sectors.

He said: "This is not a short-term thing. The idea that you can just throw a bit of money at the problem and it will be over by Christmas is fanciful. This is a serious problem and it will be with us for some time but if the public resources, which are significant, are well-targeted, this could ensure that the recovery from the downturn comes sooner than it otherwise would and is quicker than it otherwise would be.

"My strong advice to government is that there has to be both a framework to facilitate and encourage government departments where they are able to make a very positive impact. But there also has to be an overarching look at where the impact is going to be most beneficial. There is a limit to how much public finance is available."

His comments follow news at the weekend that Chancellor of the Exchequer Alistair Darling was prepared to allow government departments to raid their budgets for coming years in order to kickstart the economy.

A Treasury spokeswoman told CJ: "Money is available, if necessary, from future years."

But there are no plans at the moment as to which schemes would benefit from the extra cash.

A spokesman for the Construction Confederation said that the organisation would tell the government to stick to its current public spending programmes and get them back on track, rather than be distracted by new initiatives.

And he singled out Building Schools for the Future (BSF), which has fallen significantly behind schedule.

Data released last week revealed that 13 of 17 projects in the first wave of the programme have had their original completion date postponed as well as 70% in the second and 42% in the third.

A CC spokesman said: "It's not a matter of advancing them, it's a matter of getting them back on track from the industry's point of view because they are falling behind we need to get these things moving."

"If they got the schools programme back on track that would be an immediate benefit."

However Raynsford called for a broader approach, with a particular focus on housing.

He said: "BSF is important - it is an ongoing programme and continuing support will be important but the industry is probably hurting most in the housing sector.

"And that is where judicious investment, through housing associations, using the Homes and Communities Agency budget to keep capacity and to facilitate developments that otherwise would simply die, is also going to be vital. So I wouldn't be as prescriptive as saying just one, it's got to be across the board, it's got to look at all sectors."

More details on the government's spending plans are expected to be set out in the Pre Budget Report, scheduled for mid to late November.