In search of certainty

23 January 2012 The government is working hard to find new investors in UK infrastructure, but some of its actions will do little to attract new players to the market
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Chancellor George Osborne paid a visit to the Far East earlier this month, and one of the top items on his agenda was to court the region's sovereign wealth funds - and anyone else with a warehouse of spare cash - to entice them to invest it in UK infrastructure.
Coming hot on the heels of November's National Infrastructure Plan - when Osborne announced plans to bring institutional investors into the sector - it is clear that the government is serious about using infrastructure to stimulate the country's flagging economy. It also fits well with the narrative being spun by the Treasury, that the coalition government has been setting the 'environment for investment' since coming to power.
The problem, though, is that this important work is being undermined by the actions of other departments. 
Just this month, the waste and energy sectors have been beset by uncertainty as they await decisions from ministers. In waste, it was Environment Secretary Caroline Spelman's decision on whether to award PFI credits to the Norfolk waste scheme. The fact she had previously given the go-ahead to the scheme set alarm bells ringing across the industry, as councils and companies alike feared she might be willing and able to step into other signed projects where there is opposition.
Then there is the continued uncertainty surrounding the feed-in tariff (FIT) for solar schemes, which is putting businesses in real danger. Energy and climate change minister Greg Barker may have issued guidance on the matter last week, but it doesn't take away from the fact that the tariff was pulled from under the feet of installers across the country with no warning.
Meanwhile, Health Secretary Andrew Lansley has made his opposition to PFI known to anyone who will listen - despite the fact that there are several hospital schemes due to be procured through PFI over the next year or so.
Perhaps the most surprising thing here is that all these ministers are Conservatives, so in theory should be more willing to help out their party colleague Osborne than, say, Vince Cable or Chris Huhne. 
These actions are in fact making Osborne's job harder. Ask any investor what they need to put money into a country, sector or project, and 'certainty' will appear near the top of the list. The mixed messages coming out of the different government departments could scare off all those that the Chancellor has spent so much time and effort glad-handing - both overseas and in the UK.

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This page was last updated on:
23 January 2012.

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In search of certainty

The government is working hard to find new investors in UK infrastructure, but some of its actions will do little to attract new players to the market

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