The Chancellor should encourage local councils to fund new infrastructure projects by using government-backed municipal bonds, according to a top boss at CrossRail contractor URS.
Tom Bishop, chairman of the engineering giant in Europe, Middle East and Asia, said he hoped that George Osborne's Autumn Statement this week will look at alternative financial models such as municipal bonds to bolster investment in the UK's infrastructure.
"There's a lot of pent-up capital out there and investors want attractive homes for their money. Municipal bonds are used by local government in the US to great effect as they give investors a long-term return and help kick-start the local economy," he said. "In California they have been used to help finance local schools and new highways. The UK should be looking at this – as well as other mechanisms – to attract much-needed new investment."
The US group, which has its European headquarters in London, employs 3,000 people in the UK and is the largest contractor on the HS2 high-speed rail and CrossRail projects.
Mr Bishop added: "I'm looking for the Chancellor to shine a spotlight on the entire private finance initiative process. The British model has huge strengths, but we need to make it far more transparent with proper disclosure, processes, protocols and above all performance and payment criteria. Bold steps need to be taken to sell the concept more convincingly to all the stakeholders involved."
He also recommended setting up a new independent authority charged with providing proper governance over all applications of the private finance initiative (PFI) process and a better focus on explaining why the public-private partnership model can achieve the best value for funds investing in long-term projects.
City backs Osborne
George Osborne has received the thumbs-up from City investors in the run-up to Wednesday's Autumn Statement. Nearly two-thirds of leading fund managers backed the Conservatives as having the best plan for the economy, according to a survey from the spreadbetter Capital Spreads. 83 per cent believe Labour's plans are "weak", while 82 per cent made the same judgement on the Liberal Democrats, although the Coalition Government was given a pat on the back – 67 per cent approve of its attempts to tackle the economic crisis.