Coalition budget announcement shows commitment to capital
investment
The Chancellor's announcement that there will
be no additional cuts in overall government capital expenditure
provides welcome reassurance that the Coalition recognises the
importance of capital investment to the economy, says leading
business and financial firm Grant Thornton UK LLP.
Today's announcement confirmed that the
currently planned reduction of 25% in gross annual public sector
investment that will take place by 2015/16 will not change. The
current capital programmes will nevertheless be subject to a
fundamental review to direct resources to where they will achieve
the greatest economic return so there may be winners and losers by
sector and region when the spending review is announced in
October.
Neil Rutledge, Government and Infrastructure
Advisory Partner at Grant Thornton says: "There is no disguising
that the overall cuts in the public sector are significant, yet
against this dark cloud, Osborne offers a silver lining in his
commitment to maintaining existing capital expenditure plans, which
overall promote capital projects in the regions, including some
major transport projects and a Regional Growth Fund.
"The Coalition Government demonstrated the
importance of the role of strategic infrastructure by continuing
Infrastructure UK. The establishment of the Green Investment Bank
also confirms the importance placed on the sustainability
agenda.
"There were no specific announcements on the
use of PFI and how the commitment to the protection of capital
budgets will in practice be applied to local government PPP
projects, and there are no specific restrictions proposed on local
government prudential borrowing, allowing local financing of
investment to continue. However this will be reviewed so there
still remains uncertainty as to the methods of financing for
capital projects.
"The overall assessment of the sector will be
completed for the Spending Review announcement on 20 October but we
expect to see interim decisions on aspects of capital programmes
such as Building Schools for the Future in the meantime.
"Both the public and private sectors will be
reassured overall but still need greater clarity on specific
projects in order to continue to commit resources and avoid
abortive costs."
ENDS
For further information please
contact:
For further information, please
contact: Stephanie Aneto, Grant Thornton press office.
Tel: 020 7728 2940 or email: stephanie.aneto@gtuk.com
Notes to Editors:
Live Webinar
We will be running a live interactive internet
seminar (webinar) at 4.00pm on June 24, with a panel of experts who
will be commenting on what the announcement means for the UK
economy, taxes and the public sector. Viewers will be able to email
questions in to the live discussion.
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