Industry chief executives have welcomed the Treasury’s announcement on the new £40bn UK Guarantees scheme for major projects, according to the UKCG. But the contractors’ body also says the scheme’s success will be judged by the number of projects that come forward in the next 4-6 weeks.
The UK Guarantees scheme will make finance for infrastructure, construction and housing projects more affordable, although it still depends on having access to finance in the first place. Projects in Scotland and Northern Ireland will also be eligible.
This week’s Treasury announcement also included a £6bn temporary loan scheme specifically for PPP projects stuck in the pipeline, which the UKCG says are most likely to be found in the waste, energy and water sectors.
UKCG chief executive Stephen Ratcliffe told CM: “The Treasury has almost deliberately crafted the criteria not to make hard and fast rules, and are waiting to see what projects come forward. They could find they are over-subscribed and have to prioritise.
“No one really has a feel for how many projects there are out there, but it’s now up to contractors and clients to be pro-active and come forward.”
The chief executives of UKCG members Carillion and Costain both told Construction News they were optimistic the scheme could help get projects off the ground.
Carillion’s Richard Howson said: “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 £250bn of projects in the National Infrastructure Plan and make a huge contribution to economic growth.”
But others have questioned how many projects have progressed to the point where the affordability of finance is the only stumbling block. Alex Carver, partner in law firm Freshfields, told Construction News: “The reality is that there is a very limited number of projects, where the private sector is involved, that are literally ‘shovel ready’ where a financial backing guarantee or government co-lending is all it takes for these to have the certainty to get off the ground.”
Full details of the Treasury announcement are available at www.hm-treasury.gov.uk/press_62_12.htm
