Out-Law News 2 min. read
15 Nov 2011, 4:24 pm
A report in the Sunday Times newspaper said that the Treasury, in conjunction with the Department for Business, Innovation and Skills (BIS), is designing a scheme intended to generate £50 billion in private sector investment in housing and roadbuilding projects. The scheme will form part of a growth strategy to be announced alongside the Chancellor’s Autumn Statement on 29 November.
Speaking to the BBC on Sunday, Chancellor of the Exchequer George Osborne stopped short of mentioning figures for the Government’s plans. However, he insisted that reducing the UK’s budget deficit remained his primary responsibility.
“I fully accept we need to go further. We need to have more initiatives and more Government plans to help stimulate housing, get homes being built, help construction, help with more infrastructure, help small businesses get credit. I accept all of that and we are going to announce plans for all those things in the coming weeks. But let’s not forget you are not interviewing a European finance minister who is currently terrified he can’t sell his country’s debt tomorrow,” he said.
Infrastructure law expert Jon Hart of Pinsent Masons, the law firm behind Out-Law.com, said that it was “hard not to be cynical” about the reports.
“The construction industry desperately needs this work, so all this speculation is a bit like waving a glass of water in front of a man who is dying of thirst,” he said. “It’s interesting that the reports are mentioning road projects given that the Highways Agency’s budget was so savagely cut as part of the Spending Review. Unless the Treasury has something clever up its sleeve, the figures simply don’t stack up.”
Reports last week suggested that an imminent update to the Treasury’s National Infrastructure Plan (NIP) would introduce a new investment model using pension funds to finance infrastructure projects once they reach the operational stage.
The initial NIP was published in October 2010. It outlines the scale of the challenges currently facing UK infrastructure and the major investment that it needed to underpin sustainable growth in the UK.
Infrastructure law expert Hart said that any update to the NIP had to address the current ‘pipeline’ of projects available for the construction industry to bid on.
"What industry so crucially needs is an idea of what the current pipeline of work looks like. The original National Infrastructure Plan recognised this, and it has been suggested that its second iteration will come good with this,” he said.
The Scottish Government recently announced its own infrastructure pipeline along with a targeted capital investment programme worth around £9bn over the next three years, Hart said. The Scottish Government’s scheme will see a pipeline of infrastructure projects worth £2.5bn delivered through a non-profit distributing finance model.
“One can only hope that NIP2 will provide similar substance, which the construction industry so desperately needs,” he said.
The Government has previously indicated the importance of infrastructure investment to its plans to regenerate the economy. Last week it announced the provisional allocations for its £500 million Growing Places Fund, intended to enable developers to complete housing and commercial projects put on hold due to inadequate infrastructure. The funding will be made available for projects that will help “facilitate economic growth, jobs and housebuilding”, such as improved transport links and flood defences.
In addition, 40 of the biggest infrastructure projects have been ‘hand picked’ for Government attention. The Treasury intends to examine these projects to remove barriers to their completion such as funding obstacles and planning problems. However, funding through these projects will be obtained through prior spending commitments and the use of existing funds.
