The Green Investment Bank will receive an additional £2bn funding but borrowing will not begin until 2015, chancellor George Osborne announced in today’s Budget.
He said he wanted to make the UK a “world leader” in green energy. However, the bank will only be able to begin borrowing in 2015/16 at the earliest — the end of the coalition’s parliament — and that this decision will be dependent on the country’s financial position. The £2bn, like the initial £1bn funding for the bank, will be raised from asset sales.
It is set to start operating in 2012 and aims to leverage £15bn over this parliament for infrastructure investment.
Civil Engineers Contractors Association director of external affairs Alasdair Reisner said there “remains considerable work to be done before it is up-and-running” and called for a swift follow up on the precise nature of the way that the Bank will operate, and the projects that it will be able to fund.
Osborne also said that a carbon floor price will be introduced from 1 April 2013 will begin at £16 per tonne CO2 rising to £30 per tonne CO2 in 2020. There will be a consultation on this before it is introduced.
The chancellor also promised to remove barriers that prevent planning applications in today’s Budget in an attempt to encourage growth and create jobs.
Among the proposals was a pledge to introduce time limits on applications, although Osborne refrained from outlining what they would be. He also announced that a pilot for land planning auctioning would go ahead.
He said that councils are spending 13% more on planning applications than they did five years ago despite planning applications falling.
Osborne also revealed the first 10 new urban Enterprise Zones that will be established in the following Local Enterprise Partnership (LEP) areas: Birmingham and Solihull; Leeds City Region; Sheffield City Region; Liverpool City Region; Greater Manchester; West of England; Tees Valley; North Eastern; the Black Country; and Derby, Derbyshire, Nottingham and Nottinghamshire.
Enterprise Zones were a key part of urban regeneration in the 1980s and 1990s. Like the original regime, the key drivers for growth will be enhanced capital allowances on new buildings, relaxations in the planning regime and business rate relief of up to £275,000 over five years. Local authorities will also be able to keep rates generated by the new zones.
There will be a further zone in London, which Osborne has asked London mayor Boris Johnson to choose and the government will launch a competitive process for interested LEPs to establish 10 more Enterprise Zones.
In transport, Osborne said £200M would be added to rail investment, including schemes in Manchester, and Swindon to Kemble, and councils will receive an additional £100M to repair potholes, doubling what they had already received last month.
Osborne also pledged to publish a two year rolling programme of infrastructure and building projects which have secured funding. The document will be first published in the autumn and will be updated quarterly.
CECA claimed it was a “huge victory” for the industry.
“The announcement of a two-year forward programme of publicly funded infrastructure and construction projects represents a huge victory for the industry, which has long campaigned for greater clarity over future opportunities,” said CECA director of external affairs Alastair Reisner.
“This move will benefit both industry and taxpayers, as companies will be able to better plan their resources to meet future opportunities, and invest in targeted training and innovation,” he said.
Osborne made no mention of Treasury body Infrastructure UK’s costs of civils implementation plan that was intended to be revealed ahead of the Budget to outline how high costs can be reduced.
Plan for Growth
The Treasury also announced today that the government will open up public procurement to small and medium sized enterprises (SMEs) with the aim of them delivering a quarter of the government’s contracts. It set out the pledge in a document accompanying the Budget called Plan for Growth.
“Bureaucratic processes have held back start-ups, SMEs and voluntary and community sector organisations from successfully bidding for public sector procurement contracts,” says the document.
“Ineffective procurement practices and artificial barriers to competition support neither value for money to the taxpayer or economic growth. Suppliers to Government have consistently said that bidding for Government work often takes too long, is too costly and is too difficult for small firms and the voluntary sector to compete.
“The Government is a major customer and spends £236bn a year on goods and services from a diverse range of suppliers.”
CECA said this was not the first time Westminster had focused on the issue.
“Previous attempts to improve public procurement have hit the rocks as individual clients have failed to implement proposed improvements, leading to continued bureaucracy,” said CECA director of external relations Alasdair Reisner. “Where the industry and Government identify clear opportunities to streamline procurement, these changes should be compulsory, with monitoring and sanctions against those clients who fail to reform.”