The UK government is making good on its promise of helping privately financed infrastructure projects get off the ground with yesterday’s publication of enabling legislation.
The Infrastructure Financial Assistance Bill, as the scheme is known, will, once approved, allow the government to guarantee up to £40 billion (€50 billion; $64 billion) of infrastructure investment. The initiative was first announced in July by UK Chancellor George Osborne.
Those projects seeking money from the new scheme will have to demonstrate that work can begin within 12 months, that they will have a positive impact on economic growth and that they will provide good value for money for taxpayers.
Part of the scheme also includes guarantees worth some £6 billion for around 30 planned public-private partnership projects (PPP) which are struggling to secure funding.
In our exclusive survey of over 200 industry professionals, respondents were somewhat sceptical on the impact of the guarantee scheme. Asked if the scheme is what is needed to kick-start UK infrastructure investment, about 50 percent of respondents answered “maybe” with 37 percent saying “probably”.
“This [guarantee scheme] could help if executed properly. Personally, I doubt it will be. Looking at the example of healthcare, the Coalition government has managed to breed confusion and investor fear through mixed messages on what, in general terms, it might be prepared to guarantee,” commented one respondent.
When announcing the legislation, the government said the guarantee scheme will be able to cover the transport, energy, communications and environmental sectors. It also explained the “government has wide discretion over how a guarantee is structured in terms of scale, timing, risk exposure and relationship, subject to the terms and dynamics of each individual project. The guarantees could cover key project risks such as construction, performance or revenue risk”.
The UK government has outlined a decade-long, £250 billion National Infrastructure Plan offering a roadmap of some 500 infrastructure projects.
*To find out more about the UK government’s infrastructure plans and what investors think of it, click here to download our UK Infrastructure Report 2012.