Magazine article Public Finance

Ministers Set to Finance Faltering Building Projects

Magazine article Public Finance

Ministers Set to Finance Faltering Building Projects

Article excerpt

The government is considering underwriting public sector capital projects amid warnings that building schemes are being put on hold as the recession chases away private sector investors.

The proposal has drawn a cautious welcome from experts. The CBI business organisation - which has long lobbied for greater private sector investment in public services - said urgent action was needed to avoid further delays to schemes already under way.

'Interim measures such as short-term injections of government funds should be considered to give the private sector confidence, help avoid further job losses in construction and ensure public service improvements can continue' said Elizabeth Fells, the CBIs head of public service reform. "The recession should not be an excuse to give up on much-needed reforms'

According to John Tizard, director of the Centre for Public Service Partnerships at the University of Birmingham, government help has a good chance of kick-starting delayed building projects such as the £4.5bn M25 widening scheme.

But he cautioned that state intervention was not a solution to the private sector's increasing reluctance to carry the risk of investment 'In the medium to longer term, we will see alternative forms emerge. We need to look at new public-private partnership models which bring the commercial and financial disciplines of the Private Finance Initiative to schemes which are publicly funded,' he said.

Tim Byles, chief executive of Partnership for Schools, which manages the ?45bn Building Schools for the Future programme, said that deals on new terms were being actively considered'. …

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