Public projects opened to foreign investors: State-owned overseas firms may help finance infrastructure schemes

Click to follow
FOREIGN investors are to be encouraged to come forward with funding for public infrastructure projects as part of the Government's private finance initiative, Stephen Dorrell, Financial Secretary to the Treasury, said yesterday.

Speaking after the Chancellor's Budget announcement of four new private finance projects, Mr Dorrell said he did not believe all the interest had to be 'home-grown'.

This raises the embarrassing prospect for the Government of state-owned foreign companies helping to finance new roads, rail lines, hospitals and prisons in Britain - something ministers would resist.

'I would want to consult the Gatt rule book, but I am not wild about creating a market that allows Japanese, Spanish and French taxpayers to subsidise us,' Mr Dorrell said.

He stressed that the aim of the initiative was not to reduce public spending but to provide better value for money in the design, construction and operation of large projects.

On Tuesday, Kenneth Clarke announced that the modernisation of the West Coast Main Line, the Lewisham extension of the Docklands Light Railway, a new air traffic control centre for Scotland and tolled roads will all be thrown open to private funding entirely or in partnership with public money.

Despite this, the initiative has made little headway. Of the 100 or so projects identified as candidates for private funding, only a handful, such as the Jubilee Line extension, are under way.

'What we are trying to do is create a new market in the delivery of public services,' Mr Dorrell said. 'Individual companies will have to work out whether it is a market into which they want to move.'

The key would be to ensure that projects offered value for money and that the risk was transferred to the private sector. 'We are not interested in paying private sector returns on gilt- edged securities,' he added.

Among the projects he hoped to see progress on in 12 months were prison building, transport schemes such as the Channel tunnel high-speed link and shadow tolling on motorways.

(Photograph omitted)