Chancellor George Osborne will today outline plans to offer Government guarantees on up to £40bn of infrastructure projects as part of efforts to encourage investors, including pension funds, to pump money into the sector.
In a speech on May 17, Prime Minister David Cameron asked the Treasury to look at using guarantees to boost investment in infrastructure and housing.
Osborne and Treasury Chief Secretary Danny Alexander will visit Crossrail today to explain how the programme, called ‘UK guarantees’, will work in practice.
A Treasury source says: “What we are talking about is using the Government’s credibility in financial markets to boost lending.
“The spearhead is targeted guarantees for major infrastructure projects. The nature of the guarantee will depend on the the individual project – it could be guaranteeing construction risks or it could be guaranteeing revenue risks, for example.
“It will be open to applications from today and we are expecting the first guarantees to be awarded in August. We will need to legislate for this because at the moment there is not a statutory basis for the Treasury to provide guarantees for infrastructure.
“Up to £40bn worth of projects that are ready or nearly ready could qualify.”
The guarantees will be targeted at infrastructure projects of “national significance”.
A Treasury spokesman says the plans will not impact on Government borrowing or debt, provided that the guarantees do not have to be called on in the future.