Neil Rutledge, Government and Infrastructure Advisory Partner at Grant Thornton, said:
"This is a positive budget for infrastructure, which seeks to pick up the pace of growth through targeted investment where it will best promote jobs and economic activity.
"It is clear is that the relationship between central government and local government in relation to economic development and infrastructure is becoming more mature, with evidence mounting that both understand that working together is essential to promote activity. The announcement of further Enterprise Zones, such as at the Royal Docks, where central government gives up tax receipts from capital allowances and local government gives up local business rates, is one example.
"The introduction of a cheaper lending mechanism from central government to those local government bodies that share their capital expenditure and borrowing forecasts is another example of closer co-operation. But the thinking behind the Public Works Loan Board Certainty Rate clearly shows that to maintain the interest income flowing into central government coffers, the Chancellor is ready to crowd out capital markets finance [see page 58 of budget costings].
"The announced £150m extension of the Tax Increment Financing regime to schemes falling outside the local government finance system is in theory welcome, but in practice not at a scale that will have much impact. The Budget notes make clear this is being funded by withdrawing £20m of annual resources from local authorities elsewhere [see page 60 of Budget costings].
"To really advance the role of the private sector in delivering infrastructure it would, in our view, need more significant changes and better understanding of business by government. We therefore welcome the review to be undertaken by Lord Heseltine and hope it will result in a step change in the approach adopted by government in how it works with business, including investors such as the pension funds.
It is notable that the Chancellor has not been able to announce a deal as to how Pension Funds will participate in infrastructure, in part because while the concept is simple, the issues involved are complex."
For further information, please contact:
Emma Ap-Thomas, PR Manager, 020 7728 2348 or firstname.lastname@example.org
Notes to editors:
We will have a selection of reaction videos featuring partner opinions on our website discussing all major themes of the Budget 2012. Please visit www.grantthornton.co.uk for further information.
Grant Thornton UK LLP is a leading business and financial adviser with offices in 28 locations nationwide. We are a member firm within Grant Thornton International Ltd, one of the world's leading international organisations of independently owned and managed accounting and consulting firms. Clients of member and correspondent firms can access the knowledge and experience of more than 2400 partners in over 100 countries and consistently receive a distinctive, high quality and personalised service wherever they choose to do business.
Copyright (©) 2012 Grant Thornton UK LLP. All rights reserved.