News & Analysis

Infrastructure survives cuts in new UK budget

But concrete details on the creation of a green investment bank, priority projects and measures to stimulate greater private sector investment in infrastructure are deferred until the autumn.

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For a budget so focused on cutting spending, infrastructure can claim a not insignificant victory following the unveiling of the UK’s emergency budget yesterday – it will not suffer any further cuts in addition to the projects already suspended as part of a wider review.
 
The new coalition government “recognises the important role investment in infrastructure plays in supporting economic growth and UK competitiveness. As the government acts to reduce the fiscal deficit, it will continue to encourage increased funding for infrastructure projects from the private sector,” the budget reads.
 
But while these words bode well for private infrastructure funding in the UK, concrete details on how to stimulate investment are absent from the budget, which gives only fleeting nods to the main infrastructure initiatives announced by its Labour predecessor.
 
As such, Infrastructure UK, the treasury body first announced in former Chancellor Alistair Darling’s December 2009 pre-budget report, had its mandate re-confirmed by the new government.
 
“This Budget confirms the establishment of Infrastructure UK to lead work within HM Treasury to enable greater private sector investment in infrastructure and improve the government’s long-term planning and delivery. In the autumn, the government will publish a national infrastructure plan that will set out goals for UK infrastructure,” the budget read.
 
Another proposal from the former Labour government that will be taken up by the new Liberal Democrat/Conservative coalition regards the establishment of a Green Investment Bank to “help the UK meet the low-carbon investment challenge”.
 
However, the government said it “will put forward detailed proposals on the creation of [the bank] following the spending review” it is conducting, the conclusions of which are also expected to be announced in the autumn. For the time being, the new government would only advance that it is evaluating options “for effectiveness, fiscal affordability and transparency”.