Within a recently published report, the business organisation has recommended that the Treasury enhance the credit rating of government construction schemes, claiming that such a move will make pension funds, and other private sector investors, more willing to invest.
It is hoped that its report would "act as a catalyst", with CBI director general John Cridland saying: “If we want to see the billions of pounds needed to upgrade our ageing infrastructure and secure jobs and growth for the long-term, the government must make smarter use of limited public finances.
“By underpinning and lifting the credit rating of certain infrastructure assets, it can make them less risky and more attractive to investors.
“If we can capture just a fraction of the £1.5 trillion of capital held in UK pension funds, and invest a further two percent of their total assets in infrastructure, this would make a huge contribution to renewing our energy, transport and other infrastructure.”
Currently pension funds invest around two-percent of their assets in infrastructure but are notoriously reluctant to invest in start-up projects given the risk of construction cost overruns and a lack of regulatory certainty over future earnings.
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