The chancellor George Osborne could raise the value of the UK Guarantee scheme for infrastructure projects, according to the head of Infrastructure UK.
Speaking at the Construction News Summit 2014, Mr Spence said Mr Osborne could increase the value of the UK Guarantee scheme, despite there being “quite a lot left” in the original £40bn allowance.
Mr Spence said he was “fine-tuning” the amount with Mr Osborne, which could add £10bn to the scheme, taking the total to £50bn available to underwrite infrastructure projects.
“We chose £40bn because we looked at the infrastructure pipeline and thought more was likely to be necessary – £50bn – and we’re fine-tuning that now.”
The UK Guarantees initiative, which sees the government act as a guarantor on major projects to encourage private sector investment, has prequalified 41 schemes worth £36bn to date.
But guarantees have only been formally awarded to cover £1.4bn across six schemes, meaning £38.6bn in financial support is yet to be allocated.
Mr Spence said the chancellor’s view was that “is if there’s more needed, he’s quite happy to go back to parliament to increase the size that’s available”.
A Treasury spokesperson said: “The chancellor has made it clear that if there is a need for the UK Guarantee scheme to have a higher capacity, then he is open to increasing it.
“However, given what remains unused of the £40bn dedicated to infrastructure projects and the UKGS expiration in 2016, we do not presently see a need to make a change to the limit and we have no plans to do this.”
The IUK chief also said cost inflation associated with the skills shortage and labour price increases could threaten the delivery of projects identified in the NIP.
He said if the cost of projects in the plan starts to increase, the public and politicians could turn their back on infrastructure.
“What we need to do is retain the current momentum and support there is for infrastructure, [but] I think you’ll lose that if all politicians and the public hear about is [that] we’ve got another scheme that costs us twice as much,” he said.
“If that’s the story going forward, I think we will lose an opportunity to bring our infrastructure up to world-class standards.”
Mr Spence said it was “pathetic that you have to talk about skills shortages” but that it was the most important issue for government and industry to focus on solving together.
“At times I don’t really understand what on earth is going on in this country – you can’t get kids into construction and taking it seriously.”