View from City Road: On the right track with infrastructure

Faced with a pounds 50bn deficit, any government might be tempted to ease the burden on its finances by persuading private investors to fund road, rail and other public infrastructure projects. Curiously, this government's much-vaunted pledge to do just that has so far proved to be little more than public relations bluster. Why else has the 'go-ahead' for the Jubilee Line extension been announced at least four times but not a single spadeful of earth dug?

Whether yesterday's contribution to the debate from the consultants Ernst & Young will move things forward any faster remains to be seen. As E&Y correctly observes, one of the main stumbling blocks to drawing in private partners is the large amount of front-end risk the Government wants them to assume at a stage when the final costs and payback are far from clear.

E&Y's solution is for the state to take a much more supportive role, promoting a project, steering it through the planning and pre-construction process to the point where, perhaps with a taxpayers' dowry, the private sector steps in with financing.

But this approach has its pitfalls. It puts the Government in the potential bind of being seen to be subsidising the private sector unfairly, unnecessarily and expensively.

It may, however, be the catalyst needed to break the log-jam. The alternative is more delay and further deterioration in the nation's fabric.