Prior to the election, a team of private finance experts in the Treasury carried out a review of proposals to find ways of fixing the ailing market for infrastructure finance, which has become increasingly expensive in the wake of the financial crisis.
The results of the review weren’t published, but I managed (after engaging in a few months of strange, disorienting and often menacingly complex arguments with Treasury officials), to get hold of the findings through the Freedom of Information Act.
Despite the change of government, they make for interesting reading – and they surely have more than just historical significance.
Perhaps most significantly, they make clear that the Treasury under Labour was pushing for the establishment of a permanent UK infrastructure bank – in effect, a cross-sectoral expansion of the Green Investment Bank that the coalition is now planning.
The bank would be located in the public sector (but would be separate from government, presumably to ensure off-balance sheet status) and would have responsibility for financing a high proportion of major new public infrastructure projects, including Greater London’s £16bn Crossrail scheme.
The similarity to the model proposed in the Liberal Democrats’ election manifesto is striking, so this may not be the last we hear of the idea.
A second focus of the review was the scope for what the Treasury calls ‘user pays’ models – presumably for areas such as roads and waste management, where fees for services may be politically possible, rather than areas such as healthcare and education.
In light of the current fiscal crisis, this comes as no surprise, and one suspects that if the Treasury pursues this (and an ‘official-level work stream’ has been tasked with working up plans in this area over the summer), they will be pushing at an open door.
All these suggestions are ultimately about finding ways of continuing to invest while avoiding an impact on official public borrowing and expenditure measures.
Considering the pre-occupations of the current government, they must have a good chance of being implemented.
Mark Hellowell is a research fellow at Edinburgh University
