Sunday, February 24, 2013

Infrastructure fails moved by the Government

THE cost of the construction of infrastructure projects in the North East have failed to pick up during the second quarter of 2012, despite the Government's efforts to boost the sector through private sector investment. Infrastructure workload throughout the Northeast fell in the three months to June, according to the latest Royal Institution of Chartered Market Survey Construction Surveyor, and little improvement is now seen in the sector since 2007. This is despite efforts by the government to stimulate the economy through infrastructure projects are privately funded. Last November, Chancellor George Osborne announced plans to raise 20 billion pounds from pension funds to help fund government projects of high speed railway power station. The Government has signed a memorandum relating to the Pension Protection Fund (PPF) and the industry body, the National Association of Pension Funds (Napf) to launch infrastructure fund to invest in new projects. The low level of activity seen in the construction sector in the North East with 10% more respondents reporting falling rather than rising workloads. However, it is the public sector where the greatest pressure continues. Perhaps not surprisingly, given the economic climate, we expect revenue in the region continues to deteriorate, with net falls more than the national average. RICS said that it reflects the continued pressure on margins as input costs in the North East increased faster than output prices. Surveyors noted that increased competition will lead some companies to bid for work at below cost to secure the contract. The North West is one of the few places to see a decrease in workload with the North, Scotland and Northern Ireland, while the South, Midlands and Wales saw the number of stable jobs. Looking continue, despite a bleak picture for the sector during the three months to June, surveyors in the North East is optimistic, with a net balance of 21% more surveyors predicting workload will increase in the next 12months. Simon Rubinsohn, RICS chief economist, said: "The infrastructure workloads failed to take in the North East, despite the Government's efforts to boost the sector through private investment. "Action is needed to support the rhetoric for the construction industry to play a key role in driving the economy forward over the next few years. "Scary, benefits will continue to be squeezed into a couple of surveyors in the North East reported increased levels of competition led some companies to bid for work at prices below cost in order to secure the contract. ' Nationally, the RICS survey says 4% of respondents reported falling rather than rising workloads.

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