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Government to offer construction guarantees

Philip hammond

The government is to offer construction guarantees for the first time, chancellor Philip Hammond has announced in his annual Mansion House speech.

The move has been welcomed by the Institution of Civil Engineers, which says it is a step in the right direction.

In the speech, Hammond says access to European Investment Bank (EIB) funding will continue while the UK is a member of the EU, so the funding to business and projects will be sustained.

He said: “And to ensure that finance continues to be available after Brexit, alongside these discussions with the EIB I can also announce I am expanding the support available to capital funding in the UK.

“For infrastructure projects, we will broaden the range of the UK Guarantee Scheme by offering construction guarantees for the first time.

“And we’ll consider other credit enhancement tools, such as first loss guarantees, to reduce the financial risk that complex projects face.”

In addition, Hammond said the British Business Bank is to raise the limits on the amount it can invest in venture capital funds from 33% up to 50%. It will also bring forward some of the £400M investments announced in the Autumn Statement.

Hammond added: “In the long-term, it may be mutually beneficial to maintain a relationship between the UK and the EIB after we leave the EU.

“And we will explore the options together.”

Institution of Civil Engineers director general Nick Baveystock said in response: “Clarity on the UK’s access to the European Investment Bank is essential to maintaining a healthy pipeline of infrastructure projects that improve people’s lives.

“We asked during the election that this relationship was prioritised by whichever party came into government, so it is reassuring that it is at the forefront of the chancellor’s mind. We stand ready to work with government and the sector to develop longer term commitments or alternatives so we can maintain our position as an attractive place to invest. This will allow us to hold onto our reputation as a global leader in engineering and innovation.

“By expanding the UK Guarantee Scheme it’s clear that the needs of the sector have been taken on board and that some of the risks have been taken into account. This is a step in the right direction and we await the details of how the schemes will operate.”

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