MPA calls for reversal of planned public investment cuts in 24 March Budget

12 March 2010

MPA Executive Director, Simon van der Byl, today called on the Chancellor to reverse Government plans to halve public investment in the budget on 24 March.

He said, "In the previous Budget, Government set out plans to reduce net public investment by 50 per cent by 2013/14. Given that private sector construction is still in decline and will remain very subdued for several years, the planned cuts to public investment – most of which is construction – would significantly damage the prospects of economic recovery. Such cuts would also damage the quality of our public services and infrastructure when there is much outstanding work to do.

"We know that construction investment is a very effective means of stimulating economic growth, each £1 invested in construction generates £2.84 of economic activity. Net public investment remains a small proportion of total Government spending and is equivalent to only 7 per cent of current spending by Government and only 6 per cent of overall Government debt. Given the economic benefits of this relatively small proportion of Government spending, it surely makes economic sense to sustain public investment and boost economic recovery."

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