The Treasury swiftly followed its rail infrastructure pledge of £9.4bn for 2014-19 with the announcement of UK Guarantees, at a cost which varies according to reports between £40 and £50bn.
In the week that growth for the year was forecast by the International Monetary Fund to slow to only 0.2%, a joint statement from chancellor George Osborne and chief secretary to the Treasury Danny Alexander cited last year’s National Infrastructure plan and confirmed a range of projects to be underwritten thanks to what they described as the coalition’s “creditworthiness”.
The statement, issued 17 July, read: "The two-year scheme begins today, with the first guarantees expected to be awarded in the autumn. To be eligible, projects will be of national significance – as identified by the government's National Infrastructure Plan 2011; financially credible; good value for the taxpayer but without a guarantee would be unable to proceed.
"And they must be ready to begin construction within a year. This scheme has the potential to transform UK infrastructure – up to £40bn of energy, transport, communication and utilities projects could benefit.
"Second, a new temporary lending programme will provide support to public private partnerships that are struggling to get financing. This will ensure that over £6bn of transport, hospitals, schools and housing projects are not delayed by current constraints in the long term lending markets.
"Third, we will provide targeted support to our export sector – vital if we are to move away from an economy built on debt and start to pay our way in the world. We need to export more to the likes of China and India. A new £5bn pound Export Guarantee Facility will provide long-term loans to overseas buyers of UK exports at competitive rates. Major growth sectors from aerospace, oil and gas extraction equipment, to transport and telecommunications – could benefit."
On BBC Radio 4 Alexander reiterated: "Anyone who feels this would help, come and talk to us and we will turn it round very quickly”, before insisting the strategy was "not about spending new money".
Rachel Reeves, shadow chief secretary to the Treasury, was less than welcoming of the announcement, however: "There is no guarantee that government-backed loans will see any infrastructure projects going ahead in the next year which wouldn’t have happened anyway," she said.
"And they will not reverse the damage done by two years of deep cuts to long-term projects like house building and the school-building programme, which have seen a collapse in the construction sector. With Britain in a double-dip recession because of the Chancellor's failed policies, anything which helps to get the economy moving again is welcome. But these proposals do not go far enough."
The move also follows a Reform policy conference in June, "Building confidence in infrastructure", at which keynote speaker Vince Cable, secretary of state for business, innovation and skills, said: “we are looking at the way in which supply chains in the UK have been eroded over the years in the 1980s and again over the last decades, and looking at how we can build them up and how we can use government procurement while being free trading."
While The Civil Engineering Contractors Association (CECA) welcomed the scheme, its director of external affairs Alasdair Reisner warned: "There is a confidence gap preventing private sector investment in infrastructure. However, it remains to be seen whether this will actually attract new investment in infrastructure, thereby supporting increased output in the sector.
"CECA looks forward to hearing more detail on which projects the UK Guarantees scheme will enable to move forward within the year-long timeframe the chancellor has set. We welcome any steps that the government can take to provide a catalyst to infrastructure provision to kick-start growth in the economy. However, it important that we do not seek to portray the UK Guarantee scheme as a ‘silver bullet’ that will solve the challenges facing the industry over the coming years.
"CECA believes that only by working closely with industry to unblock stalled projects, enable targeted investment and adopt innovative models of infrastructure financing will the government achieve the targets it has set in addressing the infrastructure deficit the UK faces over the next decade."
Institution of Civil Engineers (ICE) director general, Nick Baveystock, said: "At last government is using its balance sheet to provide guarantees to get infrastructure projects moving. But, as ever, the key is to see actual delivery of projects not just talk about how they might be facilitated. Here the government’s record is less good.
"I hope the criteria for accessing the guarantees are not made excessively difficult - and also that, if the scheme is not having the desired impact, government takes rapid action to review the criteria. The delivery of our nation's infrastructure needs driving forward in partnership between government and industry. Both need to demonstrate leadership and commitment, but government needs to understand that inspiring confidence in a credible infrastructure programme must emanate from Whitehall."
Also commenting, managing director of UK engineering consultancy WSP, Paul Dollin, said: "While any effort by government to get projects off the ground is very welcome, the issue in today’s market is not solely about a shortage of private money it’s about providing long-term certainty for investors, particularly on returns. However this is definitely a step in the right direction and should help build confidence."