UK: UK Budget 2014: An Infrastructure Sector Review

In his budget speech, George Osborne confirmed that although the deficit is down by a third, there is still a long way to go. The budget therefore is about economic security, and has support for savers at its centre. The good news is that the Office for Budget Responsibilty (OBR) has confirmed growth predictions of 2.7% for this year (compared to 0.6% a year ago) and, by later in 2014, the UK economy should have grown to the point where it is larger than it was before the economic meltdown six years ago.

The Chancellor's speech today followed a fairly well-worn path when it comes to recent government announcements and initiatives around infrastructure investment.  It combined impressive and welcome statements of intent with a marked reticence to give substantive detail as to exactly how and when Britain will really begin to make inroads into addressing the oft-mentioned years of slow decline in our essential economic infrastructure. 

Not for the first time, the provision of further guidance has been postponed to a later date – the Autumn Statement to be precise, when we're promised "detailed plans for the projects that will be supported for the rest of the decade".  That is good, but it is difficult to avoid the feeling, that we have already had plenty of plans, but precious little pipeline. 

For now, we have a defiant reminder of the benefits of HS2, and a determination that it should go "further north faster". We have confirmation of the well-trailed GBP 270 million guarantee for the Mersey Gateway and a nod to the Welsh Government that they can get on with improving the M4, and use new tax and borrowing powers to do so.  House-building also receives a number of targeted initiatives, complete with a new Garden City in Ebbsfleet.

But perhaps the most eye-catching announcement is nothing to do with long term strategic planning, and all to do with the Great British weather - with GBP 140 million allocated for battered flood defences and even more for filling in potholes. 

This is welcome, of course, but reactive repairs and maintenance will not drive the industry forward in the way required.  It seems that the weather will be taking a turn for the worse again, before we find out more about our direction of travel.

Some of the UK Budget 2014's key announcements include:

Expanding the reach of UK businesses

Through the UKTI, the UK Government is expanding the reach of UK businesses abroad, with exports to Brazil, India and China rising faster than those of our competitors.  This increases the need for competitive export finance, and the government is doubling the amount of export finance lending available to GBP 3 billion, with interest rates cut by a third.  This should help those looking for infrastructure work in lucrative international markets.

Housing and regeneration

House-building has increased by 23%. Positively, half a billion pounds of finance is being offered to small house building firms, and further, GBP 150 million is being provided to support the "Right to Build" initiative for those building their own homes in what is a strong step forward in terms of helping to generate more growth in the housing development market.

The "Help to Buy" scheme is also being extended as well as a new homes scheme at Barkingside and the first new 'Garden City' for a century is also proposed for Ebbsfleet. The government also intends to publish a prospectus on the future of garden cities which will undoubtly be carefully watched by the regeneration, property and construction sectors.

Although savers are at the centre of the budget, there's something for spenders too – the regeneration of Brent Cross which has already obtained planning consent.

However, as the sharp-eyed among you will have spotted, most of this is not overly new however hopefully the renewed focus on these projects will foster heightened activity and funding in the coming year. 

Additionally, the new planning court which has been established to assist with house building opens its doors in a couple of weeks' time so no doubt it will be a 'watch and see' 'over coming month to see whether this assists developments. 

Energy

There is compensation worth almost GBP 1billion for energy intensive industries for the rising prices caused by the renewables obligation and feed-in tariffs, through to 2020.

Transport

Under today's budget, there is GBP 270 million for the Mersey Gateway Bridge (first announced last year) and new tax and borrowing powers for the Welsh assembly will allow them to upgrade the M4 in South Wales.

GBP 140 million is to be made available immediately to repair the flood defences which were swept away by this winter's weather. No mention of new schemes though however local authorities will also be able to apply for a share of a GBP 200 million fund for pothole repairs.  

It is clear that these funding allocations are aimed at ensuring projects progress and also in response to community needs.

For the full budget announcement, please click here

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