Yesterday’s Budget announcements contained some good news for infrastructure investors and developers, including increased capital for the Green Investment Bank (GIB) and a new “fast-track” planning process, but the market will have to wait a little longer for details of clear initiatives on a number of the Coalition Government’s key infrastructure policies.
Green Investment Bank
The Chancellor yesterday announced plans to inject £3 billion of capital into the GIB, £2 billion more than was initially proposed last year. This additional investment will be funded from asset sales, including the sale last year of High Speed 1, the rail link between London and the Channel Tunnel, and the air traffic control service (NATS). Provided that national debt reduction targets are met, the GIB will be permitted to leverage up to £15 billion in private capital from 2015/2016 (for more on the GIB, click here and see also the National Infrastructure Plan (link below)).
The establishment of the GIB has now been brought forward from 2013 to next year and further details on its structure and the sectors that it will invest in are expected to be announced in May. However, some may be disappointed that the GIB’s power to borrow will not begin until national debt targets are met, given the estimated £550 billion of investment needed to de-carbonise UK energy infrastructure before 2020.
Investment in transport and infrastructure
The Government plans to invest £30 billion in Britain’s transport network over the next four years, an increase on the last four years. £200 million will be used to fund the development of high speed rail, including Crossrail and a new link between Manchester Victoria and Manchester Piccadilly stations, in line with long-term aims to reduce reliance on domestic air travel.
More details on Government expenditure on transport and infrastructure will be set out in the report on the ‘long-term forward view of projects and programmes’ for the UK, due in autumn 2011 as part of the National Infrastructure Plan.
The Chancellor also announced measures to encourage investment in low carbon and renewable energy infrastructure, including a renewed commitment to public funding for four Carbon Capture and Storage (“CCS”) demonstration plants. These will now be funded from general taxation and the proposed CCS levy will be scrapped.
The Chancellor also announced welcome proposals for the streamlining and simplification of the planning approval process. A ‘Major Infrastructure Planning system’ will be created to allow for a fast-track approval process for applications, with a target duration of 12 months from the start of each enquiry for determination of such applications.
Plans to shift the burden of proof for planning applications made for sustainable developments so that the opponents of a scheme will have to demonstrate good reasons why a planning application should be blocked will also be beneficial for developers, as will proposals that planning applications may be made jointly.
Whilst yesterday’s Budget provided some reassuring indications on the Government’s commitment to low carbon energy, the GIB and investment in transport , further clarity on how these proposals will be incorporated into the National Infrastructure Plan will be welcome (for more detail, click here). Infrastructure investors will need to continue to monitor developments, and reports on the structure and scope of the GIB (expected in May) and the Government’s ‘long-term forward view of projects and programmes’ for the UK will no doubt be eagerly awaited.