Today’s address by Chancellor George Osborne may have painted a rosier picture of the UK’s recovering economy but it failed to satisfy investors hoping for more concrete commitments to develop the country’s infrastructure.
With a speech zooming in on pension rules, corporate tax and the launch of a new one pound coin, little new came in the form of pipeline projects to give substance to the assertion that “modern infrastructure is part of a successful economy”.
The Chancellor’s most significant announcement was a £270 million (€323 million; $449 million) government guarantee for the Mersey Gateway Project, a scheme to build a new six-lane toll bridge across the River Mersey and the Manchester Ship Canal in north-west England.
Osborne allocated another £140 million for flood defence repairs and gave the Welsh government greater tax and borrowing powers to fund the region’s infrastructure needs, including improvements to the southern M4 motorway.
The Budget also included £200 million to fix potholes in the UK’s roads network, available via competitive bidding to the country’s 326 local authorities.
A number of industry insiders swiftly expressed their disappointment at the lack of tangible measures to convert last autumn’s £375 billion National Infrastructure Plan into a concrete, investable pipeline for the private sector.
“Today’s Budget was, as feared, a damp squib,” said Steve Bromhead, UK head of infrastructure, industry and utilities at consultancy EC Harris, in a statement. “What is becoming clearer is the need to turn this plan into action and to integrate infrastructure policy.”
Osborne did promise further clarifications this autumn of “the projects to be built over the remaining decade” and reiterated the government’s commitment to “take high-speed rail further North,” a reference to the £50 billion HS2 project currently under development.
But the Chancellor was notably silent on specific projects aimed at bolstering the UK’s power capacity, focusing instead on efforts to cut energy bills for the country’s manufacturers.
“An opportunity remains for the government to get on the same page as institutional investors and funders before the general election, but there isn’t much from today’s announcement to suggest that this is going to be particularly high on the political agenda,” said Jon Hart, infrastructure partner at law firm Pinsent Masons.
Other observers were more upbeat, noting that £50 billion of infrastructure projects open to private investment had been detailed alongside today’s budget. “With infrastructure a priority but the public purse strings still tight, additional sources of investment will help ensure major infrastructure projects become a reality,” said Deborah Zurkow, chief investment officer at Allianz Global Investors.
The government alleged (said?) that project-specific investment opportunities were so far largely confined to the electricity generation sector, with a potential pipeline worth £18.3 billion in offshore wind, £10.4 billion in onshore wind, £7.4 billion in nuclear, £4.2 billion in combined gas-cycle turbines (CCGT) and £2.6 billion in tidal power.