Today the Chancellor of the Exchequer, George Osborne, has set out the Government's four-year public spending plans in the much-anticipated Comprehensive Spending Review ("CSR").
Investors in infrastructure have faced a period of considerable uncertainty since the election of the Coalition in May this year, but can now take stock about what the CSR means for future opportunities in the infrastructure sector in the UK.
The CSR sets out how resources are allocated across all of the government departments for the years 2011/12 to 2014/15. The four-year plans allow for a clear direction to be set for the future and show where the Government's priorities will lie during this period. The review takes place at a time of record budget deficit and departmental budgets, with the exceptions of health and overseas aid, will be cut by an average of 19% over four years.
The health, education, transport and energy sectors have fared better than for some other sectors such as the custodial and justice and social housing sectors where the cuts are deeper. However, funding for education and health is largely aimed at benefiting frontline services and budgets for capital projects have been reduced. Industry will be disappointed by the level of capital invested by the Government to start up the Green Investment Bank, at only £1 billion initially, against industry recommendations of £4-6 billion. The surprise announcement of the day comes from DEFRA, who are scrapping seven PFI waste projects.
Infrastructure investors will now need to be patient and wait for full details of the headlines to emerge. Each department will produce a business plan for the next four years which will be released next month and a number of White Papers, on local growth, reform and defence industrial policy, are expected in the next six months. These more detailed plans will clarify the opportunities and challenges ahead for the market.
We consider in further detail the key points coming out of the CSR in the attached report.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 20/10/2010.
