Out-Law / Your Daily Need-To-Know

UK Budget 2020: 'huge boost' for infrastructure, but details needed

Out-Law News | 11 Mar 2020 | 5:35 pm | 2 min. read

The UK government has promised "the biggest programme of public investment ever" as part of its Budget for 2020, with planned investment in roads, railways, affordable housing and broadband.

New chancellor Rishi Sunak promised over £600 billion worth of investment over the next five years of government as part of his first Budget speech. However, publication of the planned National Infrastructure Strategy (NIS), in which it will formally respond to the July 2018 recommendations of the independent National Infrastructure Commission, will not take place until later in the spring.

Infrastructure expert Jon Hart of Pinsent Masons, the law firm behind Out-Law, said that the proposed spending "should give a huge boost to the infrastructure sector, and could result in a significant growth in construction output".

"However, there is a lack of details behind the numbers and what these numbers might mean in practice for the sector, given how long schemes take to come to market and the potential disruptions in light of skills shortages, new immigration restrictions, working through of Brexit settlements and the current fall out caused on supply chains due to the coronavirus outbreak," he said.

Hart Jonathan

Jonathan Hart

Partner

There is a lack of details behind the numbers and what they might mean in practice for the infrastructure sector, given how long schemes take to come to market.

"Businesses will be looking to the National Infrastructure Strategy expected in spring for guidance, and forthcoming changes to be made to the Treasury Green Book, which sets out how decisions on major investment programmes are appraised," he said.

Initial investment commitments set out in the Budget include a £27bn 'road investment strategy' for England's strategic road network of motorways and major A roads between 2020 and 2025, . Planned projects include upgrading the A46 Newark bypass to address congestion, upgrading the A66 Trans-Pennine to a dual carriageway and building the Lower Thames Crossing to increase road capacity across the Thames to the east of London.

"While these commitments are obviously welcomed, the Budget has highlighted the perpetual problem of identifying what projects are genuinely new and what are re-announcements of previously committed expenditure. This may be clarified further when the NIS is published," he said.

The Budget document contains plans for "unprecedented investment in urban transport", including a new 'potholes fund' which will provide £500m a year for local road maintenance. The government also intends to enter into five-year integrated transport settlements worth a combined £4.2bn across eight city regions, and a further £1bn for "shovel-ready transport schemes".

The government also plans to fund a major programme of improvements to rail services, including the £20 million Midlands Rail Hub project, according to the Budget document.

Hart said that the reference to 'shovel-ready' transport schemes "highlights the problem behind the announcements".

"The length of time taken to get from funding announcements to spades in the ground - as witnessed by Heathrow, HS2, Silvertown Tunnel, the Lower Thames Crossing and the like - is significant," he said.

"Additionally – but maybe unsurprisingly – there is no indication as to what role, if any, private investment may play in future projects, for example in relation to the development of the carbon capture solutions that have been announced," he said.

Sunak announced the creation of a Carbon Capture and Storage (CCS) Infrastructure Fund in his Budget speech which will be used to establish at least two UK sites for the emerging technology; one by the mid-2020s and a second by 2030. The Budget document also states that the government will support the construction of the UK's first CCS power plant, using consumer subsidies.

"Some £800 million has been identified for this purpose – the level of which is perhaps questionable given the over-arching carbon commitments that the UK is going to be required to achieve over the coming years," said Hart.

The government has also allocated £5bn to supporting the rollout of gigabit-capable broadband in the most difficult-to-reach 20% of the country.