Tolls and private money, not an infrastructure bank, will raise revenue for infrastructure spending plans under a Tory administration, NCE can reveal.
Speaking exclusively to NCE, Conservative construction minister Mark Prisk ruled-out an infrastructure bank, which has long been the subject of lobbying by the ICE. Prisk said it was better to use tolls to attract private investment to finance infrastructure.
Transport academics and experts told NCE in July that road pricing was inevitable under the next government (NCE 9 July). Prisk has backed this view, saying that while an infrastructure bank is a “good idea”, the Conservatives would be cutting public spending and calling on the private sector for infrastructure investment.
“We have respect for the ICE and it’s important to be open to ideas and suggestions,” said Prisk. “But a future Conservative government will be determined to balance the books.”
“It’s important to be open to ideas and suggestions. But a future Conservative government will be determined to balance the books.”
Mark Prisk, Conservative construction minister
In May, the ICE called for the setting up of a national infrastructure bank to secure long-term funding for essential infrastructure works. US President Barack Obama has proposed a similar bank, where public money is complemented by private funds raised by issuing bonds. Prisk said he would rather improve private funding arrangements.
The credit crunch heralded a virtual collapse of private investment and bank lending dried up completely. The market is showing signs of recovery, with a couple of very large and high-return deals − including the £6.2bn M25 Widening private finance initiative (PFI) and £2.2bn Manchester Waste PFI going ahead following lengthy delays.
Value for investment
The Scottish government abandoned both PFI and tolls as part of its manifesto and is now struggling to find ways to continue its infrastructure spending. Prisk said the Conservatives would be keen to encourage both as a way of getting equity into the sector.
“The private sector is a major player and the government needs to attract investment,” he said. “One of the options [of attracting private investment] is revenue streams through tolls.”
The Scottish government looked at issuing bonds to raise additional funding as part of its proposed alternative to PFI called the Scottish Futures Trust, but it lacked the constitutional powers to make the fiscal arrangements.
The ICE said its national infrastructure investment bank proposal is not about government spending more money.
“It is about getting better value for investment and over the long term saving consumers money, while ensuring a secure source of funding for important infrastructure projects,” it said.
The institution added that its bank would operate much like the European Investment Bank (EIB). It has commissioned Loughborough University to outline the options for a funding model.
Prisk’s thoughts on:
- The Conservatives “We will offer clarity and consistency if elected next year”
- The construction industry “There needs to be a consolidation of voices in the industry”
- Civil engineering “This is the country of Brunel, we have first class skills and world class players − it’s not riddled with problems”
- Private investment “We want the majority of the costs to be in the ground and rolling stock, not in fees and consultancy”
- Planning process “There’s an assumption that we would sweep away improvements, but we don’t want another [Heathrow] Terminal Five”
- Companies “We would wish to help by cutting corporation tax rates and look at working a simplified national loan scheme”