Chancellor Rishi Sunak set out his second Budget at the start of March. The headlines were dominated by the pandemic – the 10 per cent shrinking of the economy, the £352bn cost of the pandemic support package – but there were significant announcements that will have a real impact on project management in the years ahead. It’s worth looking closely at the implications for project managers and how this budget could affect the landscape for project infrastructure and skills.
Take the government’s ‘levelling up’ agenda. There will be a new UK Infrastructure Bank, expected to support up to £40bn of infrastructure investment. The Chancellor opened the first round of the £4.8bn Levelling Up Fund, which will support infrastructure that “improves everyday life”, including town centre and high street regeneration, local transport projects, and cultural and heritage assets. And there was £220m for a UK Community Renewal Fund in 2021-22, a stepping-stone towards the larger UK Shared Prosperity Fund which will launch in 2022 to replace EU structural funding.
This adds up to a significant amount of potential infrastructure project funding in the coming years – and creates an important challenge about coordination and effectiveness of delivery.
If funding mechanisms give the green light to a raft of projects at once, will there be sufficient consideration of how the different schemes inter-relate? There will be huge opportunities to create benefit for communities, but maximising them – and minimising the potential for clashing priorities – will pose real challenges. Delivering real value for the country will require a coherent view from the government of the overall picture, with a focus on long-term benefits. Central to that, I would suggest, will be the need to deliver effectively ‘on the ground’.
A seat at the table
Project professionals need ‘a seat at the table’ for coordination and key decisions around projects and programmes, as we argued in our Projecting the Future report. At a recent Institute for Government event, one former senior civil servant argued that some policy responses to the emerging COVID-19 crisis last year would have been more workable and effective if project delivery had been part of the discussion as policy was being formed. That’s a lesson that should feed into all aspects of government policy for the future, including the levelling up agenda.
There are encouraging early signs about the ways that these projects are being delivered. With the Oxford-Cambridge Arc, for example, there has been an emphasis on early and extensive stakeholder engagement as well as looking at the wider social and economic impact, rather than seeing this as just a set of transport initiatives. Communities will bid for stations on the new connecting rail line. Could this be a new model for major and controversial projects, being shaped by communities, not simply done to communities – and maximising the opportunities to coordinate effectively?
Project delivery capacity
Alongside coordination, we must think carefully about the impact of the Budget on capacity to deliver these ambitious projects, including skills. With ministers pressing for funding to be quickly turned into ‘spades in the ground’, how can we identify and mitigate the risk of skills shortages in key positions, including senior delivery and project professionals on the ground?
The Infrastructure and Projects Authority (IPA) chief executive, Nick Smallwood, warned at the start of 2020 that “while project delivery skills are improving, there remains a significant shortfall in both capacity and capability, against the government’s ambitions”. Fast forward to March 2021 and the IPA is launching a Project Academy as part of a package of measures to improve capacity and capability in project delivery, as foreshadowed in the National Infrastructure Plan. That’s a hugely welcome step towards building project delivery capacity in government and public bodies, but meeting the current level of ambition will take time.
Industry will also be pushed to meet demand – not least because many project professionals could be busy delivering work resulting from the Chancellor’s ‘super deduction’ tax incentive for plant and machinery investments in the next two years. The government forecasts as many as 2.8 million companies could claim this tax relief, at a cost of up to £29bn. As manufacturers’ group MakeUK has said this “could turbocharge investment in digital and green technologies”.
Does the UK have the capacity to avoid skills becoming a bottleneck on these projects? The Budget confirmed measures to encourage more apprenticeships and traineeships in business, but we still need to do more to support older workers and those changing careers in their development and retraining. This will help the project profession continue to build a large and diverse pipeline for the years ahead. Might Singapore-style skills accounts, which have offered all citizens funding to invest in their personal development, be part of the answer? Or perhaps we need a ‘super deduction for skills’ to get employers to truly turn on the taps for investment in their employees?
Away from the eye-watering numbers on the cost of the pandemic, this was a Budget with significant implications for project management. Successful delivery will demand a real focus on coordination and capacity, and a building-up of the capability to deliver both nationally and locally. It’s a big challenge, but also a big opportunity for the project profession.