Lib Dems propose National Infrastructure Bank

25 November 2009 8:58 am | By Leah Milner

Speaking at The Civilisation Congress 2009 today Cable will point out that the UK has one of the worst records for infrastructure investment in the OECD, and argue that there is an urgent need for a step change in infrastructure investment.

He will say the move will capitalise on institutional investor demand from pension funds, and provide long-term opportunities for retail investors.

The Lib Dems say investment in infrastructure would create jobs, increase competitiveness, promote environmental sustainability and boost the economic recovery.

Cable will say: “There is a big hole in the prospects of the long-term recovery and growth of the UK economy.

“Our infrastructure is currently rated 34th in the world, which is poor by anyone’s standards. The Policy Exchange estimates that £500bn needs to be spent over the next decade on transport, energy storage, broadband and transmissions systems.

“But in this recession, infrastructure investment is one of the first things to be squeezed and there is currently no prospect of investment on anything like the scale that is needed.”

The Lib Dems argue the PFI model is no longer fit for purpose due to its over dependence on bank finance.

They say the solution is a mechanism to reduce the cost of capital - through Government guarantees - while tapping in to private savers’ demands for long-term investment.

Cable will add: “A National Infrastructure Bank would tap into the demand from institutional investors - pesion funds and insurance companies - for long-term investment opportunities and from retail investors.

“Government would provide guarantees but the National Infrastructure Bank would be professionally managed and make investment decisions on an objective, project by project basis. It would not be a nationalised industry.”

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