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Updated Mar 5, 2021

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Infrastructure bank, 'levelling-up' and growth deals included in Budget 2021

Chancellor Rishi Sunak used his 2021 Budget to promise that the new UK infrastructure bank will be able to deploy £12 billion of equity and debt capital, and be able to issue up to £10 billion of guarantees.

The infrastructure bank headquarters will be based in Leeds which, according to the Budget, will benefit from the city's position as an established financial hub and it's transport links across the UK.

It will look to provide financing support for private sector and local authority infrastructure projects across the UK, in an attempt to help the Government meets it objectives on the climate crisis and regional economic growth. The bank will begin operating in an interim form later in spring 2021.

Sunak said he would do whatever it takes to support people and businesses, and that he had set out a Budget to protect jobs and livelihoods, as the UK emerges from the COVID-19 pandemic. Nevertheless he warned that repairing the damage would take time.

The Government have also offered to make an offer of support to the Able Marine Energy Park on Humberside and sign a memorandum of understanding with Teeswork Offshore Manufacturing Centre on Teesside to support the development of another offshore wind port hub.

Alongside the Budget, Sunak launched the £4.8 billion Levelling Up Fund prospectus, which will be invested in infrastructure that aims to improve everyday life across the UK. This includes:

  • town centre and high street regeneration;
  • local transport projects; and
  • cultural and heritage assets.

The prospectus sets out guidance to local areas on the process for submitting bids, what kind of projects are eligible and how bids will be assessed. The Government have identified priority places based on an index of local need to receive capacity funding to help them co-ordinate their applications.

The Budget will also see 750,000 eligible businesses in the retail, hospitality and leisure sectors in England benefit from business rates relief.  For housing, the Ministry of Housing, Communities and Local Government (MHCLG) will establish an MMC Taskforce, which will be backed by £10 million of seed funding, to accelerate the delivery of modern methods of construction (MMC) homes in the UK. This will consist of experts from across government and industry to fast-track the adoption of MMC.

Infrastructure

For infrastructure, the Budget included:

  • a study commissioned by the Government on towns and regeneration on how to maximise benefits of infrastructure policy and investment for towns;
  • local cultural projects in Carlisle, Hartlepool, Wakefield and Yeovil will receive a share of £18.8 million;
  • £135 million will go towards accelerating the start of construction on the A66 Trans-Pennine upgrade to 2024, continuing from the Spending Review 2020 that the construction phase will be halved from 10 to five years as part of Project Speed;
  • confirmation on how much each region will receive of the £4.2 billion intra-city transport five-year consolidated funding settlements committed in the 2020 Budget from 2022-23:
    • Greater Manchester £8.6 million,
    • Liverpool City Region £5.6 million,
    • Sheffield City Region £5.2 million,
    • Tees Valley £3.5 million,
    • West of England £4.1 million,
    • West Midlands £8.9 million,
    • West Yorkshire 7.4 million;
  • £50 million to develop proposals for transport improvements around the HS2 Birmingham Interchange Station to help support regeneration;
  • £59 million towards the construction of five new stations in the West Midlands and £40 million to reinstate passenger services on the Okehampton-Exeter line;
  • £5.2 billion for a flood and coastal defence programme for England which will start in April this year.

Growth deals and town funding

For growth and town funding, the Budget included investment being accelerated in the following city and growth deals:

  • Ayrshire: an extra £3.4 million a year from 2021-22 for the remaining 10 years of the deal;
  • Argyll and Bute: an extra £800,000 a year from 2022-23 for the remaining 10 years of the deal;
  • Falkirk: an extra £1.3 million a year from 2022-23 for the remaining 10 years of the deal;
  • Swansea Bay: an extra £5.4 million every year from 2021-22 for the remaining seven years of the deal;
  • North Wales: an extra £4.4 million a year from 2021-22 for the remaining nine years of the deal;
  • Mid Wales: an extra £1.8 million a year from 2021-22 for the remaining 10 years of the deal.

The Budget also states that over the next five years £84.5 million will be brought forward to speed up investment in local economic priorities. It also outlines a further 45 Town Deals across England will receive a share of more than £1 billion from the Towns Fund to help level up regional towns.

This will give the following regions the tools to design and implement a growth strategy for their area and aiding local recovery from the impacts of COVID-19:

  • North East: a share of £46 million;
  • North West: a share of £211 million;
  • Yorkshire and Humber: a share of £199 million;
  • East Midlands: a share of £175 million;
  • West Midlands: a share of £155 million;
  • East of England: a share of £148 million;
  • South East: a share of £43 million;
  • South West: a share of £41 million.

Energy and green

For energy and green, the Budget included:

  • £27 million for the Aberdeen Energy Transition Zone so North East Scotland can play leading role in meeting the UK's net-zero ambitions;
  • £4.8 million to support the development of a hydrogen hub in Holyhead, which will pilot the creation of hydrogen from renewable energy and its use as a zero-emission fuel in HGVs;
  • £20 million programme to support the development of floating offshore wind technology across the UK;
  • £68 million nationwide competition to implement several 'first-of-a-kind' energy storage prototypes or technology demonstrators;
  • £4 million nationwide competition for the first phase of a biomass feedstocks programme to support the rural economy in making improvements to the production of green energy crops and forestry products;
  • a government promise to issue its first sovereign green bond, or green gilt, this summer, with a further issuance to follow later in 2021 as the UK looks to build out a 'green curve'.

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