Following last month's budget the picture coming from the construction sector seems to be one of uncertainty. The government claims that it has now changed the planning system to drive local growth and the first payments of the New Homes Bonus which will total £200 million in 2011 have been made to councils. In addition the FirstBuy scheme is promised to help 10,000 first time buyers with £210 million available over 2 years.

In their latest release the Office for National Statistics shows that total construction output in February 2011 was up 8.6% on January 2011 and down by 0.3% on February 2010. All sectors were up, with the strongest growth in Public Housing repair and Private Industrial new build (both from a small base). When December 2010 to February 2011 are compared with the previous 3 months there was a fall of 18.3%.

The Construction Purchasing Managers' Index also showed an increase in activity across all sectors in March, continuing the trend from January and February.

In December 2010 Infrastructure UK published its Infrastructure Cost Report, their research demonstrated that the UK is currently less cost effective than Europe when it comes to delivering major infrastructure projects and that there is an opportunity to realise savings of 15% (£2-3 billion per annum). In response the Government published their implementation plan last month, a programme of activity detailing how these cost savings are to be realised through 2011 and beyond. These activities include the publication of a forward programme for Government investment; new models of competition and procurement; more effective governance and a common set of principles for the management of contingency budgets, as well as the improvement of cost benchmarking. By May 2011, to support these changes and to ensure Government and Industry are fully engaged, a charter is to be published setting out expected behaviour in future relations between the Government and the construction Industry.

The Capital Review team, a panel of experts led by Sebastian James, Operations Director of Dixons Retail, have just published their findings following an independent review of capital funding and how it is spent on schools in England. It sites ambiguity in the current goals of capital spend, calling for clearer objectives to ensure enough fit-for-purpose school places for every child. It also states that allocation of funds should be objective, taking into consideration demand for pupil places and the condition of the local estate. The panel propose that when building new schools the use of a clear set of standardised drawings and specifications, incorporating the latest thinking on educational requirements and regulatory needs, are used. This they believe would provide an environment for improved quality and reduced costs. In a message which should be heeded by all government procurement the report states "There must be a single, strong, expert, intelligent 'client' acting for the public sector in its relationships with the construction industry and responsible for both the design and the delivery of larger projects."

In an accompanying letter to Michael Gove, James says that as much as 30% of the total money spent could be saved.