Richard Threlfall, KPMG’s UK Head for Infrastructure, Building and Construction, comments on today’s announcement by the Government to underwrite £50bn of investment in infrastructure and exports in order to boost growth
“This is a bold response to the crisis facing the financing of UK infrastructure. With bank finance both scarce and expensive, the selective use of Government guarantees puts the UK’s AAA rating to good use and should allow pension and bond finance to be tapped for infrastructure investment. The initiative provides a valuable safety net for projects currently in procurement and should ensure that no well structured project fails for lack of finance over the next few years.
“The use of the Government guarantee is subject to a number of important conditions and project promoters will be rushing to ensure that their projects qualify. Particularly critical is the need to get work started within 12 months of the guarantee being issued. This targets the Government’s support at well developed projects that are already past planning hurdles. What is unclear is how many projects are this well prepared. The guarantee is only available as a last resort, and the risk is that projects spend too long being scrutinised before getting the support they need.
“If it is applied quickly to a number of projects, the UK Guarantee initiative should provide a valuable boost to the UK economy. Every £1 spent on construction in the UK drives £2.84 in economic benefit. The Government seems to have heard and understood this, and the UK Guarantee should help get Britain building.”
-ENDS-
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
