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Budget 2013: Osborne pledges another £3bn a year on infrastructure
by David Campbell on Mar 20, 2013 at 13:02
Osborne has pledged to spend a further £3 billion a year over the decade from 2015 as the government seeks to redirect government spending towards capital spending.
Deborah Zurkow, CIO of infrastructure debt at Allianz Global Investors, welcomed the move, but said the government needs to do more to attract much needed private sector investment.
'By earmarking a further £3 billion from a fiscally constrained budget, the chancellor has underlined the importance of infrastructure spending to the UK economy,' said. 'Given the estimated £200 billion pipeline of infrastructure projects identified by the government, the lion’s share of investment will need to come from the private sector.
'The government should be congratulated on the steps it has taken thus far but more focus is needed on unlocking additional sources of investment. In particular there is a gap – perhaps bridgeable through education - between the type of projects the government is seeking investment for (new builds) and the types of investments pension funds are looking to make (refinancing).'
But John Poore, public sector director at Turner & Townsend, was more scathing, pointing out that despite previous promises, total infrastructure spending fell by 12% last year as the private sector would not 'play the white knight'.
'So the buck has been passed back to the public sector. The chancellor says the Treasury is willing to spend, and that the money will come from savings made by other government departments,' he said. 'But that money cannot be spent efficiently without clear targets – and these were notably missing from today’s speech.
'Public sector infrastructure spending should not be an indiscriminate spraying of investment around the country. Without focus and carefully costed plans, the chancellor might as well send a fleet of RAF helicopters to drop bundles of banknotes.'
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