1.5 The environment in which public services operate has been transformed by far-reaching social, economic and technological developments over the past decade.Changing demographics and patterns of work and life, the impact of globalisation, new technologies such as the internet and other developments, including in relation to the environment, are creating new and rising demands on public services and substantial changes in public attitudes and expectations. Budget 2008 sets out the strategic challenges facing the economy and confirms the importance of infrastructure investment in driving economic prosperity and growth. The Government also needs to meet new environmental and security challenges. This requires further progress and investment in associated assets and supporting infrastructure. Government action to meet these challenges include:
• Education - total schools capital investment has risen from less than £700 million in 1996-97 to £5.9 billion in 2007-08 and is projected to rise to £8.2 billion in 2010. The long-term Building Schools for the Future and the new Primary Capital Programme will be investing over £11.2 billion over the 2007 CSR period to transform the school estate in England: rebuilding or refurbishing around 315 secondary schools and 675 primary schools. Over the next 15 years, these programmes will rebuild or refurbish all secondary schools in England and at least half of all primary schools.
• Health - over the past 11 years the Government has undertaken the biggest hospital building programme in the history of the NHS. 93 hospital schemes (70 PFI and 23 public capital) worth £5.3 billion are already open and another 34 schemes (27 PFI and seven public capital) worth £6.3 billion are under construction. This investment is helping to deliver a modernised NHS estate; in 1997, 50 per cent of the NHS estate dated from before 1948 - today that figure is down to 20 per cent. The challenge now is to address investment in community-based health care. Progress is well underway in this area with the NHS Local Improvement Finance Trust (LIFT) programme already having invested over £1.5 billion.
• Transport - the 2007 CSR also extends the Long Term Funding Guideline to 2018-19, meaning that over the 20 years from 1997 UK spending on transport will have more than doubled in real terms. The Government will use this to take forward Crossrail and address the investment priorities highlighted by the Eddington Study1.
• Housing - since 1997, £20 billion has been invested in improving the standard of social homes for tenants. As a result the number of households living in non-decent social homes has fallen by more than a million, and over a million children have been lifted out of poor housing. Over the next three years the Decent Homes investment programme will reduce the number of non-decent social rented homes by a further 500,000. In addition the Government will continue its long-term commitment to increase the availability of social housing by investing over £6.5 billion to deliver 45,000 new units of social housing a year by 2010-11.
• Defence - the 2007 CSR increased planned spending on defence by an average of 1.5 per cent a year in real terms over the next three years up to a total budget of £36.9 billion by 2010-11. This commitment provides for capital investment in the armed forces of £24.9 billion over the three years. This investment will help to ensure that our armed forces have the right balance of capabilities, both equipment and infrastructure, to be ready to meet a range of challenges. This will include building two new aircraft carriers for the Royal Navy, new protected vehicles for the Army, additional air transport capability and new investment in armed forces accommodation.
• Waste Management - the Government is increasing investment in more sustainable waste management options. The 2007 CSR announced £2 billion of PFI Credit funding for local authority waste investment. This is in addition to, and roughly matches, investment by local authorities themselves. This will allow the UK to continue to reduce the amount of waste sent to landfill, and will contribute to the UK's effort to meet its targets under the EU landfill directive.
• Climate Change - over the next two decades, the UK will need substantial investment in new electricity generation capacity to replace a number of closing coal, oil and nuclear power stations and to meet expected increases in electricity demand. The Government wants to ensure that the UK has an investment framework which encourages the private sector to bring forward investment at the right time. This includes low carbon forms of generation and other investment promoting sustainability. All procurement and investment programmes should consider sustainability and contribute to the Government's aim of moving to a low-carbon economy.
1 The Eddington Transport Study, HM Treasury and Department for Transport, 2006