The much anticipated Autumn Statement is now with us and while it doesn’t include too many surprises it gives us a framework and a potential pipeline which should be welcomed.
The highlights include:
- approximately £5bn of investment in UK infrastructure
- £2bn in transport of which £1bn will be invested in roads including upgrading the A1, the A30 and the M25
- a further £1bn loan will be made to extend London’s Northern Line to Battersea and plans to take HS2 to the North West and Yorkshire are to be announced next year
- over £1bn will be invested in education some of which will be earmarked for the Priority Schools Building Programme
- £270m will be invested in further education colleges
- Ultra-fast broadband infrastructure will be implemented in 12 cities including Cambridge, Coventry, Oxford, Portsmouth, Salford, Newport and Aberdeen
- £600m will be invested in scientific research
- Government will invest in the construction of 120,000 new homes
- PF2 will be used to develop accommodation for the Ministry of Defence
Further pledges included a £40bn government guarantee in respect of infrastructure project finance, of which £10bn has already been committed, and the eagerly awaited pension fund investment platform is to be created in 2013.
The new approach to private finance for public infrastructure is encouraging, in particular the proposed debt to equity ratio which may widen the scope of senior debt solutions and the 18 month target to get deals to preferred bidder is a positive objective.
The participation of the public sector in project companies established to deliver PF2 projects is also a positive development and we have seen that work particularly well where local government is involved in joint ventures with the private sector.
We now have a way forward on how Government sees the role of private finance in the development of public infrastructure and CMS looks forward to getting on with supporting our clients in the delivery of the pipeline.
Please contact Paul, Jonathan or Rob if you have any questions in relation to the above or the consultation version of the standard form project agreement to be adopted in relation to the Priority Schools Building Programme (which will form the basis of the PF2 project agreement) or “A New Approach to Public Sector Private Partnerships” published today by HM Treasury.