Leading infrastructure contractors Costain, Balfour Beatty and Carillion have welcomed the government plans to guarantee £40 billion worth of infrastructure projects.
Chancellor George Osborne revealed yesterday that government will use its balance sheet to guarantee up to £40 billion worth of projects from the 500 schemes in the National Infrastructure Plan. Applications opened immediately, with the first set to be awarded in the autumn, subject to legislation being passed. Projects must be able to start within 12 months.
The Treasury told CN today that it expects 230 projects to be unlocked by the scheme.
A £6bn lending programme will also kick-start stalled public private partnerships schemes - giving a much-needed boost to social infrastructure including health and education.
Carillion chief executive Richard Howson said: “Carillion welcomes the measures announced to support private sector funding for infrastructure, which will help to underpin the availability of finance for future projects.
“History has repeatedly shown that infrastructure projects make a major contribution to economic growth. So, measures that accelerate the delivery and underpin certainty of projects by stimulating private sector investment will have a positive impact, both on our industry and the UK economy.
“Carillion has financed 58 projects to date in the UK and also in Canada, where pension funds are already a major source of finance for infrastructure projects.
“With the right funding model in the UK, there is no reason why our industry cannot deliver the £250 billion of projects in the National Infrastructure Plan and make a huge contribution to economic growth.”
Costain chief executive Andrew Wyllie also said the announcement was ‘very welcome’.
“It is essential that the UK invests in its transport, energy, water and waste assets to maintain the fabric of the nation, to create jobs and to rebalance the UK economy by accelerating growth in the regions,” he said.
“Costain is helping to meet these vital national needs. We’re very pleased to see that the government recognises and is committed to fulfilling the requirement for major infrastructure investment, thus enabling the UK economy to grow and to remain competitive in a rapidly changing world.”
Ian Tyler, CEO Balfour Beatty, said: “We welcome today’s announcement. Infrastructure investment provides a stimulus for economic growth and, coming hard on the heels of the rail investment announced earlier in the week, this latest announcement will help galvanise activity.”
Skanska’s chief financial officer and executive vice president Roger Bayliss said: “Firstly, I think it’s very encouraging that there’s anything. I think it’s potentially people starting to realise the value that construction contributes to GDP.”
Pointing out that £1 in construction contributes £2.84 to GDP, he added: “I think we should keep beating that drum loud and clear.
Mr Bayliss said the £6bn support fund for public private partnerships was also an encouraging step by government.
However, industry experts have questioned whether projects will be able to get off the ground in the time given.
Miles Watkins, director of sustainable construction at Aggregate Industries, also added: “Again we see extensive criteria to qualify and we worry that what is described as a ‘robust assessment and approvals process’ will realise itself in lengthy bureaucracy that is not helpful.
“Ascertaining that a project is at its last resort for financing seems somewhat trite. The collection of projects that are within the NIP and are ‘shovel ready’ could provide a much needed immediate injection under this scheme but with so many hoops to jump through, it will be some time before any benefit is felt.
“It also calls back into question the merit of the NIP itself - here we are with an opportunity to unlock funding for projects and how many are actually anywhere near ready to go forward? The measure and visibility of the much talked about ‘pipeline’ remains dubious.”