Osborne to use pensions to fund National Infrastructure Plan

Monday, 28 November 2011 09:53

Chancellor George Osborne is to unveil a multi-million pound investment plan this week that is aimed at jump-starting Britain's economy.

While £5 billion in projects will be paid for by more spending cuts, most of the money will come from British pension funds and investment from China and will be directed towards improving infrastructure.

The government says this National Infrastructure Plan will provide support for social and economic programmes over the next ten years and has collaborated with the National Association of Pension Funds (NAPF) and the Pension Protection Fund in the hope of obtaining two-thirds of the £30 billion needed in this way.

"We're putting in place a new arrangement with private pension funds - which is the first time this has been done in this country - to try and unlock pension fund money to go into infrastructure," explained chief secretary to the Treasury Danny Alexander.

Mr Osborne claims that UK pension funds see infrastructure as a good investment vehicle at a time when assets like the stock market are unpredictable.

This is a view shared by NAPF chief executive Joanne Segars, who said that up until now, it has been difficult for pension funds to put money into infrastructure.

She commented: "This could be a real win-win. The UK desperately needs to update its infrastructure and pension funds are looking for inflation-linked, long-term investments.

"Pension funds hold over a trillion pounds in assets, but only around two per cent of that is invested in infrastructure. There's the potential for that to be much higher."

Roads and railways linking Manchester and Leeds are believed to be among those in line for improvement.

Meanwhile, Mr Osborne has insisted in a BBC interview that the government is to stick to its Plan A fiscal squeeze.

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