Government to provide £1bn guarantee to Battersea Power Station development as well as £1bn for roads schemes and £10bn of infrastructure guarantees

Battersea Power Station

Battersea Power Station

The government will guarantee a £1bn loan to the Battersea Power development as well as provide a £1bn boost to roads as part of a fresh infrastructure push unveiled by George Osborne today.

He said the government would guarantee a £1bn loan, through the UK Guarantees scheme, to extend the Northern Line to Battersea Power Station - a piece of infrastructure critical to enabling the development to proceed. Osborne said this would “support a new development on a similar scale to the Olympic Park”.

The Treasury said the UK Guarantee would allow the Mayor of London to borrow £1bn at a new preferential rate to support the Northern Line Extension to Battersea scheme, “subject to due diligence and the agreement of a binding  funding and development agreement with developers”.

The Treasury said: “Northern Line extension to Battersea is key to the redevelopment of Battersea Power Station and the regeneration of a historic part of London.  

“Government intervention has the potential to enable an £8bn investment at the Battersea Power Station site, supporting the wider redevelopment planned for Vauxhall, Nine Elms and Battersea, which could create up to 16,000 new homes and up to 25,000 new jobs,” he said.

Osborne also said that £10bn worth of major infrastructure schemes had pre-qualified for government-backed guarantees under the UK guarantees scheme.

 The Treasury said the UK Guarantees scheme had received 75 enquiries from project sponsors to date, of which projects with a capital value of “around £10bn have been prequalified as eligible for consideration of a guarantee”.

A Treasury spokeswoman said this £10bn comprised 14 separate projects, including the Battersea development, plus the guarantee for Crossrail rolling stock previously announced.

She would not identify the 12 other projects, but said they did not include the £4.1bn Thames Tideway Tunnel, dubbed the London ‘super sewer’, which has been tipped as a project likely to be given a guarantee.

As revealed yesterday, the government also announced £980m to expand “good schools” and build 100 new free schools and academies, as part of a £5.5bn capital boost.

The Treasury said this additional funding would be invested before the end of the parliament, and “includes enough funding for 100 new academies and free schools, as well as investment to expand good schools, in the areas experiencing the greatest pressure on places”.

The Government will also provide an additional £270m for capital investment to improve further education (FE) colleges in England, which is to be
targeted “where it will have the biggest impact on growth, and on colleges with the greatest needs”.

Osborne said the government would also commit £1bn to four major road projects, including four major schemes: upgrades to key sections of the A1; bringing the route from London to Newcastle up to motorway standard; linking the A5 with the M1; dual the A30 in Cornwall; and upgrade the M25, to support the Thurrock port development.

Osborne also announced a £600m boost for the UK’s scientific research infrastructure. The Treasury said this would be focused on Research Council infrastructure and facilities for applied research and development (R&D). “This investment will support the development of innovative technologies and strengthen the UK‘s competitive advantage in areas such as big data and energy efficient computing, synthetic biology and advanced materials,” the Treasury said.

The chancellor said the £5.5bn capital boost would be funded through cuts across Whitehall departments, with departments asked to cut their budgets by 1% in 2013-14 and 2% in 2014-15.

This is expected to release £1bn in the first year, and £2.5bn in second year, leaving £1.5bn of savings still to be finalised.

Osborne also announced:

  • A further £350 million towards the Regional Growth Fund, to provide support for jobs and growth across England until the end of this parliament
  • The government would make available a new concessionary public works loan rate to an infrastructure project nominated by each Local Enterprise Partnership (LEPs), excluding London, with the total borrowing capped at £1.5 billion
  • The Government will devolve a greater proportion of growth-related spending on the basis of the strategic plans developed by LEPs, with the aim of creating a single funding pot for local areas from April 2015, as well as providing £10m per year for each LEP to build their capacity