The UK Guarantee Scheme was created to help get infrastructure projects off the ground by easing the risk to lenders on projects that might otherwise struggle for private financing. Though projects have gone largely unnamed due to commercial sensitivities, industry faces a greater need for clarity on what types of projects are able to secure a guarantee. This may be possible if government lists national infrastructure projects likely to comply with its criteria for what constitutes a nationally significant project, though the Chancellor offered little direct indication of further clarity to come.
ACE chief executive Nelson Ogunshakin said: “The National Infrastructure Plan and the development of tools such as the UK Guarantee Scheme show a strong government commitment to upgrading the UK’s infrastructure and getting the economy growing again. Delivery of this kind of work can take time however, and it is important that government takes steps to say more and provide industry and investors with the certainty it needs to invest and turn strong intent into work on the ground.”
Dr Ogunshakin was also concerned that no action was taken to resolve possible delays to the Green Investment Bank’s borrowing powers.
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It was previously announced that the Green Investment Bank (GIB) would gain borrowing powers in 2015-16. But this power was made dependent on public borrowing falling as a percentage of GDP by that time. The independent Office for Budget Responsibility now expects this not to happen until 2017-18. This means that without government action to fix the date at 2015, borrowing powers will now be delayed by up to two years.
Dr Ogunshakin said: “Industry fully understands the need to bring down the public sector deficit, but with the deficit target now unlikely to be hit until at least 2017-18, action remains to be taken to avoid delay to the Green Investment Bank’s borrowing powers. This delay may hurt investor confidence and halt projects that have the potential to spur growth in the economy. Taking an interim step to fix the date for borrowing powers for 2015 would bring the Green Investment Bank’s rules back into line with industry expectations and provide much needed clarity for investors planning to deliver growth through green infrastructure investment.”
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