Lord Deighton has insisted that finance is no longer “the biggest constraint” facing infrastructure projects after he defended the government’s record on UK Guarantees.
“We now have the money”, the commercial secretary to the Treasury told the audience at the Government Construction Summit. “It’s not necessarily not having the money which is the biggest constraint we face.”
Rather, he said a range of issues before projects hit the financing stage – including planning, public debate and long lead times – were hindering projects before they became “an investable proposition that you can talk about hanging a guarantee around”.
He said many major schemes were securing their own financing without the need for a guarantee.
“Quite often a number of the projects that would qualify for a guarantee have fallen away because they get financing without the guarantee,” he added.
Mr Deighton also said an update to the National Infrastructure Plan would be published around the time of the autumn statement, providing further details on the government pipeline of major work.
Michael Fallon: UK contractors lack ambition
Michael Fallon has said British contractors are showing a “lack of ambition” in winning work abroad – a key aim of the industrial strategy published today.
Asked by Construction News what he thought the barriers were to overseas growth, Mr Fallon said the industry hadn’t seen itself as “needing to produce global champions for Britain – that’s what we’ve got to change”.
“When I go on trade delegations abroad you see the professional services there – you see British architects, project management and facilities management and software engineering professionals.
“What you don’t see enough of is big British construction companies. That’s the ambition.”
Mr Fallon highlighted the work UK Trade and Investment will conduct with the Construction Products Association as part of the government effort to change this.
He also told Construction News the industry could now “take ownership” of issues around payment, with the new Construction Industry Council featuring major contractors, small builders and specialist sub-contractors.
“Here we have the industry as a whole now taking ownership of the issue for itself. Now we have the industry bound in to taking charge of [payment] itself.”
He added that the industrial strategy would “push the industry very hard” on areas like emissions, while other areas were “more achievable” - such as improving apprenticeships and skills.
Only five guarantees have so far been made public under the £40bn UK Guarantees – the £2bn Mersey Gateway, the £1bn Northern Line extension, the £700m Drax power station, the £500m regeneration of Tottenham, and the £14bn Hinkley Point C project.
UK Gaurantees aim to ensure major infrastructure projects secure financing by underwriting debt and risk on the schemes.
Projects must be ready to start in 12 months from the award of the guarantee, in order to qualify.
Infrastructure delivery director at Infrastructure UK Stephen Dance agreed that financing was “not the blocker” it was sometimes seen to be.
“There is finance and funding out there for these projects,” he said. “There are other factors that are probably pushing ahead of that” citing planning and public debate over the future of schemes as examples.
He added that a number of major projects were now successfully finding finance in the bond markets.