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Budget: Mersey Gateway finance wins government guarantee

Promise to underwrite £270M of finance is highlight of “damp squib” Budget.

Chancellor George Osborne gave the proposed £600M Mersey Gateway bridge a major boost this week with confirmation of a £270M guarantee for the project’ debt finance package.

This prompted an announcement from the project’s client that the scheme could reach financial close “in the very near future”.

It was the most significant infrastructure announcement in an underwhelming Budget for the civils sector.

Those hoping for sweeping investment plans for repairs following the winter storms were disappointed. Just £200M was awarded for road repairs and a further £140M for flood defence maintenance.

But there was confirmation of the study into bringing forward work on the northern section of High Speed 2.

Up to £200M will be spent on infrastructure to kick start the development of the country’s first “garden city” in almost a century, at Ebbsfleet in Kent.

In the energy market, a cap will be placed on the carbon price support rate at £18 per tonne of CO2 from 2016-17 for the rest of the decade.

Osborne pledged to set out “detailed plans” in the autumn for construction projects taking place up to 2020.

The Spanish-led Merseylink Consortium could be the big winner from the Budget. It was named as preferred bidder for the Mersey Gateway crossing back in June 2013.

A spokesman for client Halton Borough Council said of this week’s Budget announcement: “The government is now guaranteeing around 50% of the senior debt required to finance the project, with the rest coming from private finance.

“This decision clears the way for financial close, when contracts will be awarded and all finance will be committed, and we expect to achieve this in the very near future.”

He added:”Preparations are taking place to allow construction work to commence in the coming weeks.”

The ICE said the Budget was a “missed opportunity”.

The Institution had urged Osborne to return capital and maintenance investment in flood risk management to pre-2010 levels in real terms.

ICE director general Nick Baveystock welcomed the flood defence and road repair funding announcement.

But he added: “We are disappointed that the government missed the opportunity to provide the longer term certainty needed to improve our flood resilience by committing to an investment programme for flood risk management which protects funding beyond the current five-year cycle.

“It is vital that the government now works closely with local lead flood authorities to target flood spending where it is needed most - and we urge the government to develop its long term plans swiftly.”

The Civil Engineering Contractors Association welcomed “any new investment” in infrastructure.

“Our research shows that infrastructure investment boosts GDP by £1.30 per every £1 invested, and that for every 1,000 jobs that are created in infrastructure construction, employment as a whole rises by more than 3,000 jobs,” said the spokesman.

“It is heartening to hear the chancellor make announcements that will not only benefit the sector as a whole, but boost growth in England’s regions, helping to rebalance the economy and secure the recovery.”

EC Harris UK head of infrastructure Steve Bromhead described the Budget as a “damp squib. As the UK economy starts to grow, we cannot continue to delay investment into our ageing infrastructure,” he warned. Investment needs to be turned into action and the government needs to accelerate to ensure it can deliver on its promises.”

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