Credit where it’s due
TEES Valley has welcomed Government measures to underwrite infrastructure projects that are struggling to get credit because of the global financial crisis.
Up to £13bn of taxpayers’ money will be used to safeguard 110 Private Finance Initiative (PFI) projects, which make up around 10% of public capital spending. Under the scheme, the private sector provides capital expenditure for infrastructure projects and then recoups the outlay and profits from the state over the life of the contract - typically 20-30 years.
PFI projects are still securing equity as the private sector is still willing to invest and bear the risk of delays or cost overruns, but some projects are finding it difficult to obtain sufficient debt as a result of the global credit crunch.
Ashok Kumar, Middlesbrough South and East Cleveland Labour MP, hailed yesterday’s announcement as “a very bold step indeed” and “a shot in the arm for Teesside”.
He said: “I gather the Treasury will be providing the funding initially from unallocated departmental funds or underspends on previous projects. This additional investment will protect and create jobs at a time when the economy needs it most.”
He said Corus was in a “prime position” to tender for work, while the programme would help other local construction firms such as Esco UK Ltd in Guisborough and Carlin How-based TC Industries of Europe Ltd.
Several Tees Valley firms including waste management firm SITA UK have already taken advantage of the scheme, which has led to a string of major investments in the area.
Last year North-east law firm Dickinson Dees LLP brokered a £40m PFI deal that will see a new community hospital and health centre in Redcar & Cleveland.
Meanwhile Roseberry Park, a new £75m mental health centre in Middlesbrough, is scheduled to open its doors next year to replace the existing St Luke’s Hospital - believed to be the largest mental health project currently under construction in the UK.
The Government has come under growing pressure to fast-track major infrastructure projects in the face of a worsening recession. Local bosses have criticised ministers for ignoring Tees Valley while pumping millions into major schemes in the south.
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