Under the “UK Guarantees Scheme”, the government has allocated up to £50 billion funds for infrastructure projects, that have been put on hold as it was difficult to raise money from private investors.
These schemes get all their initial funding from the private sector but some are struggling to take-off because of difficulties in securing funds. The government will charge a fee for financing projects in various sectors including transport, energy, communications, education, aerospace, hospital and sports. The companies seeking funds would have to meet the set criteria, which includes being able to begin work within 12 months.
The companies would also have to prove the project’s worthiness, whether it would have a positive impact on the economy or not, and also whether it would provide good value to the taxpayers or not. The government plans to release the first guarantees in autumn by providing £6 billion to around 30 projects planned under Public Private Partnership (PPP) arrangement.
Finance minister George Osborne and the Treasury Chief Secretary Danny Alexander also announced a £5 billion export refinancing facility to be launched later this year. “The measures we’re announcing today will help work get started on many important infrastructure projects and help our major exporters, providing lasting benefits for thousands of people and a significant boost to the economy”, Alexander said.
Critics opine that the government should invest on projects that are ready to take-off to raise employment and trigger an economic recovery, arguing that loan guarantees may not be enough to woo financial markets. But Osborne has said he will not put Britain’s credit rating at risk by softening his deficit reduction plan.
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