Building hope – the coalition puts its faith in infrastructure
Sunday 27 November 2011
The coalition has pinned its hopes on growing the British economy in an age of severe cuts through infrastructure, bringing the unfashionable construction industry to the forefront.
An updated National Infrastructure Plan – a £200bn blueprint was produced last year – will offer ideas of how to attract private-sector investment into building roads, bridges and even energy networks.
Infrastructure UK, which will author the report, is flirting with the idea of "project-specific bonds". This would involve the Government underwriting or issuing bonds to finance the construction and operations of projects, in the hope that the guarantee would attract money from long-term focused investors such as pension funds.
Hugh Blackwood, a vice president of URS, the US engineering giant, is among those calling on the Chancellor to kickstart infrastructure projects to get growth going in the manufacturing and engineering industries.
URS-Scott Wilson is part of the consortium building the cable car across the Thames to carry visitors to the Olympics next year. Mr Blackwood says the UK needs more schemes like this £50m project – sponsored by Emirates – to get the economy going; upgrading roads such as the A14, for example, and new airports.
The Construction Products Association (CPA), the prominent industry trade body, wrote to Mr Osborne earlier this month, with measures that would stimulate growth in the sector and wider economy.
It said that there needed to be "greater focus on capital expenditure". The Government plans to cut capital spending from £61bn to £42bn a year by 2014-15, while current expenditure is to increase by £62bn to £694bn. The CPA argued that a slight rebalance in this spending plan would "drive growth and generate employment".
Housing should be another focus, with first- and second-time buyers in need of better access to finance. This could be addressed through "some kind of mortgage indemnity guarantee scheme or ... a Government-backed savings scheme".
Since the letter was written, the coalition has launched a scheme helping first-time buyers take out 95 per cent mortgages. This was accompanied by a plan to put in £400m of public money to subsidise the construction of around 16,000 new homes.
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