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HM Treasury: "Government uses fiscal credibility to unveil new infrastructure investment plan"

Link to HM Treasury

"The Chancellor of the Exchequer and Chief Secretary to the Treasury have today unveiled a new UK Guarantees scheme, to dramatically accelerate major infrastructure investment and provide major support to UK exporters. This support is only possible because of the Government’s hard-won fiscal credibility, which the Government is now passing on to support the UK economy. 

"Applications open today for UK Guarantees to kick start critical infrastructure projects that may have stalled because of adverse credit conditions. Up to £40 billion worth of projects that are ready or nearly ready could qualify and, subject to legislation, the first guarantees are expected to be awarded in the Autumn. To qualify, these projects must be ready to start in the 12 months following a guarantee being given.

"Also from today, a new temporary lending programme as part of UK Guarantees will be available, to ensure that around 30 public private partnership infrastructure projects worth an estimated £6 billion in the next 12 months can go ahead.
"... Around £40 billion of projects could qualify for the provision of guarantees. These projects could come from a range of sectors including transport, utilities, energy and communications. [No mention of shopping centres on the North Circular Road.]

Eligible projects will be subject to charges, due diligence and as a minimum must meet five key criteria: 
  • Nationally significant, as identified in the Government’s National Infrastructure Plan 2011. The Government will also consider other exceptional projects of national or economic significance on a case-by-case basis, such as university infrastructure;
  • Ready to start construction within 12 months from a guarantee being given and having obtained (or about to obtain) necessary planning and other required consents;
  • Financially credible, with equity finance committed and project sponsors willing to accept appropriate restructuring of the project to limit any risk to the taxpayer;
  • Dependent on a guarantee to proceed and not otherwise financeable within a reasonable timeframe; and
  • Good value to the taxpayer, assessed by HM Treasury to have acceptable credit quality, not present unacceptable fiscal or economic risks and to make a positive impact on economic growth.
"The Government will consider the most effective form of guarantee on a case-by-case basis, using a robust assessment and approvals process."

Link to BBC web site

BBC: "Infrastructure plan: UK to guarantee investments"

 "The government is to underwrite up to £40bn of investment in infrastructure to try to lift the economy.

"Chancellor George Osborne said the UK Guarantees scheme would help release private sector funds and kick-start schemes which have stalled due to problems raising funds."

BBC economics editor Stephanie Flanders said it was possible that not many infrastructure projects would qualify for the funding, because of the conditions attached.  She continued:
 "As well as jumping through all these hoops, to qualify for the partial guarantee, which will be tailor-made for each project, the backers must also be able to demonstrate that they definitely would not be able to go ahead without this carefully delineated government support.

In other words, it has to be a perfect project in every possible respect, but somehow not quite perfect enough to get up and running entirely on its own."

The Guardian: "George Osborne will guarantee loans to start developers building again"

"George Osborne will announce on Wednesday new a package of measures to get Britain building major infrastructure projects which he claims could lead to £50bn of spending in the economy.

New loan guarantees and lending for big building projects follow months of criticism from across the political spectrum and from the private sector that the government has not been doing enough to generate jobs and growth.

It follows two other significant announcements in the past few days: a funding-for-lending scheme to get banks to make more loans; and support for £9bn of investment in railway infrastructure.

"... A government source admitted this week's series of announcements had been tightly scheduled to create a 'big splash'."

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