Osborne offers loans for PFI deals
The loans will only be available for the next 12 months, and will provide investment to around 30 projects. The initiative remains separate to IUK’s ongoing review of PFI.
IUK will also underwrite up to £40bn of private finance for schemes, which are able to apply to the Treasury to be part of the initiative from today. It is hoped the initiative will allow funding to flow by the autumn.
The guarantees will see the government underwriting the construction risk on a project, or the risk of future revenue streams, in a move designed to encourage more institutional investors to come into the market.
Eligible projects will have to meet five key criteria: nationally significant; ready to begin construction in the next 12 months; financially credible; not otherwise financeable; good value for money.
Osborne believes the UK’s balance sheet is now strong enough to cope with underwriting such investment without endangering its credit rating.
“UK Guarantees will use that hard-won fiscal credibility to provide public guarantees of up to £50bn of private investment in infrastructure and exports,” he added.
Under the plans, there will also be a £5bn exports refinancing facility, which will provide long-term loans for overseas buyers of UK exports at competitive rates.