The Confederation of British Industry is pressing the Government to consider introducing a dividend tax credit on investments in new infrastructure projects in a bid to boost pension fund interest in the sector.
In his autumn statement in November last year, Chancellor George Osborne unveiled plans to unlock £20bn of private investment for public infrastructure projects.
Osborne said: “What we are seeking to do is get the pension funds together in a private sector vehicle where they can cooperate and invest in British infrastructure.”
The CBI has today produced a report outlining a series of recommendations designed to make infrastructure investment more attractive to pension funds.
These include introducing a dividend tax credit targeted purely at new infrastructure projects in order to make the investments more attractive to defined-benefit pension schemes.
The business lobbying group also wants the Government to lift the credit rating on “greenfield” projects, which it says tend to have a riskier construction phase.
The CBI proposes raising the credit rating on these projects to above investment grade BBB-.
CBI director-general John Cridland (pictured) says: “Infrastructure spending offers the UK the elusive growth boost we are all seeking.
“Business has been disappointed that we haven’t made more headway in the past six months.
“To help make investors an offer they shouldn’t refuse, the Government must enhance the credit rating of brand new projects, extend capital allowances to cover all types of infrastructure, ensure Solvency II doesn’t act as a brake on growth and consider the introduction of a time-limited dividend tax credit for pension funds investing in new projects.”