Record high inflation could wipe out more than £11 million from plans to invest in public services in the West of England.
New analysis shows inflation, currently at 9.9 per cent, could impact on huge projects like reopening railways, upgrading bus services and building new cycle lanes. Rising construction costs and wages mean these projects cost the public more to deliver.
Rising prices means there is likely about £11.6 million less “headroom available” in the investment fund of the West of England combined authority (Weca). This cash will instead be spent on meeting the increasing costs of major public infrastructure projects in the region.
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Details of how inflation is impacting Weca’s projects were published in recent committee papers. Council leaders from Bristol, South Gloucestershire, Bath and North East Somerset are due to meet Dan Norris, the West of England metro mayor, on Friday, September 23.
A Weca committee report said: “Deteriorating economic conditions are likely to present a new set of challenges for the region’s economy. For the combined authority, inflation, cost-of-living pressures and a potential recession increase the costs of delivery, and also shape future priorities as the region’s challenges shift.”
Four programmes facing “significant pressure” from inflation include supported bus services, reopening the Henbury railway line and building new stations, the Bristol Temple Quarter regeneration, and the wide-ranging £540-million sustainable transport settlement. Extra attention will be paid by Weca bosses to these programmes, to avoid going over budget.
Weca officers will be urged to complete projects on time, as anything running late means project costs potentially shooting up. The combined authority’s budget is particularly affected by rising construction costs and public sector salaries. Bosses originally budgeted for a two per cent pay rise, but have now revised this to four per cent, costing an extra £248,000.
According to the latest figures from the Office for National Statistics, average prices last month were 9.9 per cent higher than in August last year. Economists expect inflation to hover around 10 per cent through the autumn. Council leaders and the metro mayor will receive updates every three months on the effects of inflation and a potential recession.
