Hammond plans private finance for 'garden towns'

Chancellor Philip Hammond has pledged to use private finance to develop five new 'garden towns' around the country.

In his Autumn Budget, Hammond announced: "We will use new town development corporations to kickstart five new locally-agreed garden towns in areas of demand pressure, delivered through public-private partnerships designed to attract long-term capital investment from around the world."

Further information on the plans was sketchy, with the Budget document simply stating that the government “will also consider significant new settlements and the potential role of development corporations to deliver these using private finance”.

However, it is understood that the government would not use traditional PPP or PF2 structurestodeliver the programme of investment, with ministers wanting the programme to be as much off-balance sheet as possible. The Treasury is still working onth e right funding and financing structures for the garden towns.

Hammond also pledged £10bn of capital investment in frontline services over the course of this parliament for the NHS, to support the sustainability and transformation plans (STPs). Of this, £2.6bn will be for local Sustainability and Transformation Partnerships (STPs) to deliver transformation schemes. Twelve STPs have been chosen for the first wave of provisional funding.

The Budget document added that £3.5bn of capital funding for the NHS will be “accompanied by private finance investment in the health estate where this provides good value for money”. The market is expecting the government to sign off on Community Health Partnerships' Project Phoenix initiative imminently.

Meanwhile, Hammond set out a number of planned investments in housing, including £1.1bn for a new Land Assembly Fund, which will see Homes England (formerly the Homes and Communities Agency) work alongside private developers to develop strategic sites – including new settlements and urban regeneration schemes.

That money will come from the National Productivity Investment Fund, which was launched last year and has now been extended by the chancellor for another 12 months and expanded to over £31bn. Hammond also pledged to establish a £400m fund for electric vehicle charging points, with £200m committed byth e governmetn to be "matched by the private sector".

The chancellor pledged £1bn of lending to local authorities at a “new discounted interest rate of gilts-plus-60 basis points accessible for three years to support” available to support "high value infrastructure projects" across the country.

He confirmed that the government is working with local authorities on Crossrail 2, where he said the government is working through an independent review of funding and financing for the project.

This time last year, the chancellor announced a pipeline of PF2 projects would be published in 2017 – however that plan has since been dropped in favour of allowing projects to come to market individually. And it appears that the Tyne &Wear Metro rolling stock project, which was touted as a potential PF2 scheme, will now be funded entirely by the government.

On the general economy, Hammond revealed that GDP growth over the next five years is forecast to drop from 1.4% next year to 1.3% in both 2019 and 2020, before creeping up to 1.5% in 2021 and 1.6% in 2022.