In its emergency Budget, the government wisely accepts that capital spending on essential infrastructure must be maintained if the country is to generate the growth it so badly needs.
In advance of the Budget, the welcome given by business to a proposed cut in corporation tax was diluted (particularly in capital-intensive sectors) by the government's intention to pay for it through a reduction in capital allowances.
In the event, however, the reduction in capital allowances is lower than advertised and will not take effect immediately.
The change of plan is significant for water companies and their customers. It is too soon to be precise, but the significant upward impact of the original package on industry costs, and ultimately customer bills, appears to have been much reduced.
In keeping with these second thoughts, the chancellor also promises that major infrastructure projects that will make a significant economic return are to go ahead. Infrastructure UK, set up with all-party support under the last government, will lead work in the Treasury to encourage private sector investment and improve planning and delivery. In the autumn, ministers will publish a national infrastructure plan.
Confirmation of the role of economic infrastructure at the highest policy level should also cheer the authors of Infrastructure 2010: The State of the Nation, published last week by the Institution of Civil Engineers. The national 'report card' calls for regulatory reform to enable the water and wastewater industry to meet the challenges it faces and to avoid the effects of 'stop-start' investment.
This month Water UK published a water industry blueprint for policy change. Meeting Future Challenges shows how the industry can build on success to ensure that quality goes on improving and every customer can pay for this essential service at a time when all budgets are stretched.
For more information please contact:
Water UK Communication
020 7344 1804 (out of hours 07833450544)