Osborne announces £1bn Government guarantee for Northern Line extension

Osborne said in his statement (93-page / 2.70MB PDF), which was delivered in Parliament this afternoon, that the Government will provide a UK Guarantee to allow the Mayor of London to borrow £1bn at a new preferential rate to support the extension of London Underground's Northern Line into Battersea as part of the Nine Elms regeneration.

Osborne said that the Government has received 75 enquiries to date from project sponsors looking to benefit from the scheme, under which the Government will provide up to £40bn in guarantees to ensure that "priority projects in the infrastructure pipeline" can raise the finance they need. He said that projects with a capital value of around £10bn have been prequalified as eligible for consideration of a guarantee.

The Government will invest £1.5bn in enhancing and improving the UK road network and reduce congestion to ensure that the road network is fit for the country's future transport needs, Osborne said. £1bn will be invested within this spending review period and includes investment into upgrades of the A1 in the north east and a new link between the A5 and M1 in the east of England.

"The £1billion for roads is welcome and good news for the key schemes confirmed which are much needed," said Richard Ford, planning expert at Pinsent Masons, the law firm behind Out-Law.com.

"Particularly eye-catching is the £1billion loan and guarantee for the northern line tube extension to help deliver the Vauxhall and Nine Elms Opportunity Area which will help enable Battersea Power Station and other schemes. That has been long pressed for and the decision represents a good bit of arm-twisting by the Mayor of London, the key London Boroughs and the private sector,” he said.

Osborne also announced £10 million of funding per year for Local Enterprise Partnerships (LEPs) to spend on capacity building. Under the plans, each LEP will be able to apply for up to £250,000 additional funding per year to support the development and delivery of their strategic plan. He said that the Government will devolve a greater proportion of growth-related spending on the basis of the LEPs' strategic plans by creating a single funding pot for local areas from April 2015.

The Regional Growth Fund will also receive a funding boost of £350m to provide support for jobs and growth across England. Osborne said the Government will "look to reflect on the successes of the previous rounds" and will confirm how applicants can apply for funding "in due course".

The funding for LEPs and the Regional Growth Fund implements recommendations on economic growth made by Lord Heseltine in his Government-commissioned report 'No Stone Unturned' which was published in October. Other recommendations to be implemented include a consultation on requiring regulators to have regard to growth and a 'Focus on Enforcement' review into regulators’ appeals systems.

In a bid to promote further private investment, Osborne announced that the Government will exempt all newly built commercial property completed between 1 October 2013 and 30 September 2016 from empty property rates for the first 18 months, up to the state aids limit subject to consultation.

“The extra money for LEPs and the Regional Growth Fund are a welcome boost to the sub-regions and in accordance with the Heseltine Review," said Ford. "The changes to the empty homes rates position will also encourage re-use of empty homes and local authorities are looking at creative ways to promote affordable housing provision by bringing more empty homes back into use.”

Osborne also said that the Government will shortly set out its response to the findings of Lord Taylor's review group, which was set up in October to review and reduce the amount of existing planning guidance.

Other regulatory measures in the statement include a planned consultation on updated guidance on conducting environmental impact assessments by Budget 2013, and another consultation on raising screening thresholds set out in the Town and Country Planning (Environmental Impact Assessment) Regulations 2011 later in 2013.