..private sector money held by pension fund managers and insurance companies to fund a “wartime” infrastructure programme to boost the flagging recovery.
Abandon ship!!
http://forums.contractoruk.com/newth...=newthread&f=2
Abandon ship!!
http://forums.contractoruk.com/newth...=newthread&f=2
Ministers are drawing up plans for a £50billion housing and road-building boom amid new fears Britain is heading for a double-dip recession.
George Osborne, the chancellor, wants to harness vast sums of private sector money held by pension fund managers and insurance companies to fund a “wartime” infrastructure programme to boost the flagging recovery.
A dramatic growth plan being devised by the Treasury and the Department for Business, Innovation and Skills is designed to prompt a surge of housebuilding and public sector construction projects, including power stations, social housing, super-fast broadband and toll roads.
This will be on top of 40 infrastructure projects already in the pipeline, including rail, road and national grid improvements, which ministers say they will accelerate.
The government hopes private investors, frustrated by low returns from traditional state bonds, will be tempted to pour cash into the infrastructure schemes. In return they will get the proceeds from tolls, rents and energy bills.
It comes as the Bank of England prepares to slash its growth forecasts for 2011 and 2012, revising the rise in gross domestic product (GDP) this year to about 1%, down from 1.5% just three months ago. The scale of the government’s proposals will fuel claims that the Treasury is unofficially switching to a “plan B” as chaos in the eurozone threatens to plunge the British economy back into recession.
However, both the Treasury and Vince Cable’s business department are determined to stick to deficit targets. “We will not be changing the government’s capital spending envelope and we will not be issuing new bonds to fund this,” said a Treasury source. They insist the scheme to pump private cash into public projects will not affect the balance sheet.
Cable said: “We know there’s a large amount of institutional investment in pension funds and insurance companies looking for a safe return. At the moment, it is extraordinary that foreign institutions will invest in British infrastructure but British companies won’t.
“What we have to do is create a framework of stable regulation so that private investors will have the confidence to invest in big projects and help get the British economy moving again.”
The infrastructure scheme is expected to be the centrepiece of a growth strategy to be unveiled alongside the autumn statement on November 29. Downing Street is becoming anxious about the pre-budget report, with the turmoil in the eurozone making the number-crunching fraught.
The prime target for the money that will be released is housebuilding, after the number of new houses last year fell to the lowest level since 1923. The number of workers in the construction industry, which accounts for about 6% of GDP, has fallen by 260,000 since the downturn began.
Discussions are focusing on how to create an investment “vehicle” for the private cash that does not undermine the UK’s triple-A credit rating or increase official government borrowing figures. Whitehall sources admit they will have to be “creative” to avoid these risks. Cable described finding a vehicle for channelling private cash into public projects as the “main issue” being thrashed out.
Both the Treasury and business department admit there are no quick fixes and that the strategy could take years to pay off. “This is about building the new economy of the future, not addressing the short-term weakness caused by the eurozone,” a Treasury source said.
The growth review will also provide more details of the government’s plan to introduce so-called credit easing to boost lending to small and medium-sized business.
Officials say proposals will be announced that will both provide an immediate boost in lending to small firms and set out a medium-term plan for funding smaller companies by means other than the banks. Insiders say this means developing mechanisms for accessing the financial markets directly, by means of specialist small-business funds.
Behind the scenes there have been discussions about creating a new government bank to step in, with some Liberal Democrat coalition figures even calling for the Royal Bank of Scotland to be fully nationalised. However, insiders say neither step is likely.
The growth strategy will give a push to the creation of toll roads, starting with the A14 around Cambridge. Osborne and Cable are keen to draft in the private sector to widen the heavily congested east-west route through East Anglia that connects the M6 to Northamptonshire, Cambridgeshire and the port at Felixstowe, Suffolk.
Although the coalition has said it will not introduce road pricing on existing roads, privately Whitehall sources point out that the pledge leaves scope for booths on new stretches of existing roads.
While Osborne and Cable are working harmoniously, there are tensions between their departments and No10 over how to respond to proposals in Adrian Beecroft’s government-commissioned report on cutting red tape.
Nick Clegg, the deputy prime minister, thwarted a move to make it easier to fire underperforming employees, but there is a row over whether plans for automatic pension enrolment for workers should be delayed.
George Osborne, the chancellor, wants to harness vast sums of private sector money held by pension fund managers and insurance companies to fund a “wartime” infrastructure programme to boost the flagging recovery.
A dramatic growth plan being devised by the Treasury and the Department for Business, Innovation and Skills is designed to prompt a surge of housebuilding and public sector construction projects, including power stations, social housing, super-fast broadband and toll roads.
This will be on top of 40 infrastructure projects already in the pipeline, including rail, road and national grid improvements, which ministers say they will accelerate.
The government hopes private investors, frustrated by low returns from traditional state bonds, will be tempted to pour cash into the infrastructure schemes. In return they will get the proceeds from tolls, rents and energy bills.
It comes as the Bank of England prepares to slash its growth forecasts for 2011 and 2012, revising the rise in gross domestic product (GDP) this year to about 1%, down from 1.5% just three months ago. The scale of the government’s proposals will fuel claims that the Treasury is unofficially switching to a “plan B” as chaos in the eurozone threatens to plunge the British economy back into recession.
However, both the Treasury and Vince Cable’s business department are determined to stick to deficit targets. “We will not be changing the government’s capital spending envelope and we will not be issuing new bonds to fund this,” said a Treasury source. They insist the scheme to pump private cash into public projects will not affect the balance sheet.
Cable said: “We know there’s a large amount of institutional investment in pension funds and insurance companies looking for a safe return. At the moment, it is extraordinary that foreign institutions will invest in British infrastructure but British companies won’t.
“What we have to do is create a framework of stable regulation so that private investors will have the confidence to invest in big projects and help get the British economy moving again.”
The infrastructure scheme is expected to be the centrepiece of a growth strategy to be unveiled alongside the autumn statement on November 29. Downing Street is becoming anxious about the pre-budget report, with the turmoil in the eurozone making the number-crunching fraught.
The prime target for the money that will be released is housebuilding, after the number of new houses last year fell to the lowest level since 1923. The number of workers in the construction industry, which accounts for about 6% of GDP, has fallen by 260,000 since the downturn began.
Discussions are focusing on how to create an investment “vehicle” for the private cash that does not undermine the UK’s triple-A credit rating or increase official government borrowing figures. Whitehall sources admit they will have to be “creative” to avoid these risks. Cable described finding a vehicle for channelling private cash into public projects as the “main issue” being thrashed out.
Both the Treasury and business department admit there are no quick fixes and that the strategy could take years to pay off. “This is about building the new economy of the future, not addressing the short-term weakness caused by the eurozone,” a Treasury source said.
The growth review will also provide more details of the government’s plan to introduce so-called credit easing to boost lending to small and medium-sized business.
Officials say proposals will be announced that will both provide an immediate boost in lending to small firms and set out a medium-term plan for funding smaller companies by means other than the banks. Insiders say this means developing mechanisms for accessing the financial markets directly, by means of specialist small-business funds.
Behind the scenes there have been discussions about creating a new government bank to step in, with some Liberal Democrat coalition figures even calling for the Royal Bank of Scotland to be fully nationalised. However, insiders say neither step is likely.
The growth strategy will give a push to the creation of toll roads, starting with the A14 around Cambridge. Osborne and Cable are keen to draft in the private sector to widen the heavily congested east-west route through East Anglia that connects the M6 to Northamptonshire, Cambridgeshire and the port at Felixstowe, Suffolk.
Although the coalition has said it will not introduce road pricing on existing roads, privately Whitehall sources point out that the pledge leaves scope for booths on new stretches of existing roads.
While Osborne and Cable are working harmoniously, there are tensions between their departments and No10 over how to respond to proposals in Adrian Beecroft’s government-commissioned report on cutting red tape.
Nick Clegg, the deputy prime minister, thwarted a move to make it easier to fire underperforming employees, but there is a row over whether plans for automatic pension enrolment for workers should be delayed.
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