Chief secretary to the Treasury Danny Alexander has announced plans to create a £500 million pot to fund infrastructure and drive growth.
Speaking at the Liberal Democrat conference Mr Alexander said the Growing Places fund would provide a “one-off up-front capital investment to kick start developments” that are stalled due to cash flow problems or lack of confidence.
Half the funding is expected to come from unspent reserves in the Department for Communities & Local Government and Department for Transport budgets while the rest will come from Treasury funds normally reserved for times of war.
Mr Alexander said the fund was about “putting local areas in the driving seat, enabling local government to invest in the key strategic infrastructure projects that they have identified as priorities and getting people into work”.
Civil Engineering Contractors Association director of external affairs Alasdair Resiner said it had become “increasingly apparent” that speeding up infrastructure investment had become a priority for the coalition.
He said it was “excellent news for construction and the economy as a whole.”
“Seed funding to kick start stalled projects is a particularly welcome move. With the current economic picture, it’s not exactly surprising that much-needed private investors are hesitant to put their cash on the line by building infrastructure. While the government’s commitment to deficit reduction means there was no new money announced, using it to kick-start stalled projects in this way should help to encourage investors to buy in and get projects going sooner than they may otherwise have done.”
The Association for Consultancy and Engineering echoed the sentiment, arguing the fund had the potential to leverage substantial private funds.
The group also praised the announcement that the Public Works Loan Board will reduce its interest rates to free up £100m annually for local authorities to invest in housing.
A spokesman said: “With concerns about how to overcome barriers to investment this is a good statement of intent from government and we hope it will enable the construction sector to lead the UK back to growth.”