The Association for Consultancy and Engineering has welcomed the government’s announcement that it will guarantee loans for infrastructure projects of national importance. However, it may be some time before this generates activity on the ground and questions on long term funding remain unanswered.
The Chancellor of the Exchequer has announced that government will underwrite loans for private sector companies that struggle to finance projects at reasonable rates. While few projects are likely to be up and running before 2014, the move should ensure finance is secured to deliver key projects set out in the National Infrastructure Plan.
ACE chairman Paul Hamer said: “Government has clearly recognised that infrastructure investment is crucial to returning the UK to growth. This announcement should help projects raise finance at a reasonable rate despite on-going difficulties in the financial sector. However, one of the key concerns holding back delivery of the National Infrastructure Plan remains how government will finance the long term operation and maintenance of both social and economic infrastructure and this remains unresolved.”
Investment into infrastructure is a growing issue for the UK’s long term economic competitiveness. In 2011 the World Economic Forum ranked the UK 28th in the world for the quality of its infrastructure. This contrasts with near neighbour France which was ranked third in the world. With uncertainty on issues such as electricity market reform and plans to replace or reform PFI, many projects will remain undelivered.
ACE chief executive, Nelson Ogunshakin OBE, said: “Government rightly established the National Infrastructure Plan to help bring the UK’s infrastructure up to a higher standard. However, whether through reform of PFI, pension fund investment or more direct government involvement, answers are needed quickly to generate work on the ground and generate the growth the economy needs.”
Notes to editors
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ACE has published a series of research papers looking at the financing of infrastructure. The fourth of these looked into the changes and support needed across the pensions sector to enable pension funds to benefit from infrastructure investment opportunities.
Other papers in the series look at how government should seek to replace past models with new Public Private Finance Models that offer greater transparency and better value for money for the taxpayer.