Builder Kier Group sees its share price jump as the government reveals billion pound school building programme
- Kier Group has been beset with financial problems for a couple of years
- The government is due to announce a task force called ‘Project Speed’ tomorrow
- Schools in the North and the Midlands are set to receive ‘substantial investment’
Shares in construction firm Kier Group soared this morning after the UK government launched a decade-long plan to rebuild schools.
The Manchester-based company, which calls itself ‘the UK’s leading provider of school buildings,’ saw its shares jump 8.7 per cent to 97.9p by midday as Prime Minister Boris Johnson pledged to spend £1.8billion rebuilding English schools over ten years.
He says the government will commit to a ‘first wave’ investment of over £1billion to rebuild 50 schools, another £560million for school repairs and upgrades, and bring forward £200million to upgrade further education colleges.
Boris Johnson is due to make a speech tomorrow where he is expected to announce a task force called ‘Project Speed’ that will be dedicated to fast-tracking infrastructure projects
The Prime Minister’s Office said the North and the Midlands would receive ‘substantial investment’ and that the funding would be directed towards ‘school buildings in the worst condition.
It also said the projects would be more environmentally-friendly and help the government to achieve its net zero target for greenhouse gas emissions by 2050.
This could provide a significant boost for Kier Group due to the financial struggles that have beset the firm in the last couple of years.
The former FTSE 250 building firm announced a £264million rights issue in November 2018, which it intended to use to pay down debts. However, under 40 per cent of its rights issue was taken up.
Kier has also lost contracts, including a £25million project to restore the Glasgow School of Art’s Mackintosh Building, which was wrecked by two devastating fires over four years.
It had to issue writedowns, and saw the departure of its chief executive Haydn Mursell and chairman Philip Cox. It also declared that 1,200 jobs would go as part of its plans to save £55million a year by 2021.
Kier Group announced a £264million rights issue in November 2018, which it intended to use to pay down debts. However, under 40 per cent of its rights issue was taken up
In the 12 months to June 30 2019, it recorded a £245million loss compared to a £106million profit the previous year.
Other construction companies also saw their shares rise, though not as significantly as Kier Group. Galliford Try’s share price grew 4.4 per cent to 122.2p while Taylor Wimpey rose 1.3 per cent to 144.4p.
The education funding is part of a broader programme by the government to spend more money on infrastructure schemes to help the economy recover from the damaging effects of the coronavirus.
Mr Johnson is due to make a speech tomorrow in the Midlands where he is expected to announce a task force called ‘Project Speed’ that will be dedicated to fast-tracking those infrastructure projects.
Boris Johnson told the Mail on Sunday: ‘We’re going to need a very committed, dynamic plan: not just for infrastructure, not just for investment but making sure that young people have the confidence they need that we are going to help them get into a place of work’
He told the Mail on Sunday that he wanted the UK to ‘build our way back to health.’ Spending on new hospitals and housing is also expected. Johnson has already promised to give everyone in Britain superfast broadband by 2025.
‘We’re going to need a very committed, dynamic plan: not just for infrastructure, not just for investment but making sure that young people have the confidence they need that we are going to help them get into a place of work,’ he told the paper.
In another interview with the newly-launched Times Radio this morning, Johnson said he thought it was time for a ‘Rooseveltian approach to the UK’ and that there would be no return to austerity.
When asked about balancing the UK economy’s books, he replied:
‘I do think that the investment will pay off, because this is a very, very dynamic, productive economy. And the way to get UK business confident and growing is to give the private sector the confidence to invest in capital, in skills, in people,’