Deloitte response to infrastructure funding announcement
18 July 2012
In response to the infrastructure funding package outlined today by HM Treasury, Nick Prior, head of infrastructure at Deloitte, said:
"The Government has clearly focused on the guarantee angle, using state support to enhance the credit rating, rather than the contractor bonding or letters of credit many in the sector had expected. As a result, the public sector is taking on potentially significant levels of construction risk, while still paying a premium for private finance. It will therefore be challenging to demonstrate improved value for money.
“However, the Treasury facilitating long-term institutional investment in infrastructure projects is a welcome injection of private funding.
“The package is a very similar model to the previous government’s Infrastructure Funding Unit which, even when there were many more projects to provide funding to, only ever made one loan.
"Today's announcement does not bring forward any new infrastructure projects. It is not a lack of finance holding these back but the ability of government agencies to fund them throughout their life.
“The construction industry contracted by 5 per cent in the past 12 months, they need shovel-ready projects right now to boost economic growth. The announcement today does not change this.
"To make an immediate difference the Government needs to invest in infrastructure immediately, rather than underwrite the risk on lending to projects that are still many months away."
Notes to editors:
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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