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ACE: Regional stock exchanges could fund infrastructure

Regional stock exchanges could keep infrastructure spending afloat into a new parliament, according to the Association for Consultancy and Engineering (ACE), in its submission to Chancellor of the Exchequer, Alistair Darling ahead of his Budget of 24 March.

ACE has set out a range of options in its latest policy paper ‘Infrastructure Funding’. 

The options include the use of Tax Increment Financing (TIF), a form of borrowing based on anticipated tax increases, and the re-introduction of regional stock exchanges. 

The regional exchanges could support funding for smaller/local projects, although ACE could not clarify how this would work in practice.  

ACE has already suggested that the Government consider establishing infrastructure bonds and has supported the work done by Policy Exchange on a regulatory asset base.

ACE chief executive Nelson Ogunshakin, said: “ACE is arguing that continuing investing infrastructure is vital to economic growth and the move towards a low carbon economy.”

The paper also looks at current funding methods and provides suggestions on how to make them more effective. Further methods suggested to the government:

  • Offers tax breaks to incentivise asset management firms to invest in infrastructure
  • Use supplementary business rates where appropriate;
  • Continue the use of PPPs, using the experience from previous projects on aspects such as contractual design and obligations;
  • Use of Initial Public Offerings (IPOs)
  • Not rule out Government borrowing as a potential form of investment, but should target projects that are appropriate to this level of funding.

Nelson Ogunshakin added: “While traditional government borrowing can sometimes be the best option, there are other ways to ensure funding goes to infrastructure. We have made our suggestions in this paper to stimulate debate and explore innovative methods of funding.”

To read the paper please click on this link.

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