By Tash Shifrin
03 September 2009
A think-tank has called on the government to set up a permanent bank to finance infrastructure projects to beef up the Treasury’s arm’s-length lending unit.
The Treasury set up its infrastructure finance unit (Tifu) earlier this year to bail out Private Finance Initiative schemes that have struggled to secure debt finance during the credit crunch. So far, its only outlay has been a £120m loan to Greater Manchester’s £4.7bn waste scheme, signed off in April.
Speculation that Tifu might be asked to contribute to the £16bn Crossrail project emerged this week. But a Treasury spokesman told Public Finance: ‘The funding package agreed for Crossrail remains in place and there are no plans to alter the overall balance between private, public and fare-payer funding of the project.’
Tifu, which lends on the same terms as commercial banks, was established as a temporary solution to the credit crunch.
But the Policy Exchange think-tank – which is close to the Conservative Party – called on the government to form a permanent publicly funded infrastructure bank. It wants ministers to merge Tifu with the Public Works Loan Board, which lends to local authorities, and the public-private development body Partnerships UK.
This would support an estimated £500bn worth of infrastructure projects that are needed over the next decade, Policy Exchange said.
Edinburgh University public-private finance expert Mark Hellowell told PF: ‘I think the idea is worth exploring because of the fact that we’re clearly going to face massive public finance constraints over the long term.’
The government would need to find a way to increase the involvement of capital markets and bond finance in infrastructure investment by ‘de-risking’ it, he added.
03 September 2009
A think-tank has called on the government to set up a permanent bank to finance infrastructure projects to beef up the Treasury’s arm’s-length lending unit.
The Treasury set up its infrastructure finance unit (Tifu) earlier this year to bail out Private Finance Initiative schemes that have struggled to secure debt finance during the credit crunch. So far, its only outlay has been a £120m loan to Greater Manchester’s £4.7bn waste scheme, signed off in April.
Speculation that Tifu might be asked to contribute to the £16bn Crossrail project emerged this week. But a Treasury spokesman told Public Finance: ‘The funding package agreed for Crossrail remains in place and there are no plans to alter the overall balance between private, public and fare-payer funding of the project.’
Tifu, which lends on the same terms as commercial banks, was established as a temporary solution to the credit crunch.
But the Policy Exchange think-tank – which is close to the Conservative Party – called on the government to form a permanent publicly funded infrastructure bank. It wants ministers to merge Tifu with the Public Works Loan Board, which lends to local authorities, and the public-private development body Partnerships UK.
This would support an estimated £500bn worth of infrastructure projects that are needed over the next decade, Policy Exchange said.
Edinburgh University public-private finance expert Mark Hellowell told PF: ‘I think the idea is worth exploring because of the fact that we’re clearly going to face massive public finance constraints over the long term.’
The government would need to find a way to increase the involvement of capital markets and bond finance in infrastructure investment by ‘de-risking’ it, he added.
