Private investors may be used to fund £50bn building boom

Chancellor George Osborne wants to encourage private companies to fund a “wartime” infrastructure building programme encompassing power stations, social housing, super-fast broadband and toll-roads, according to a Sunday newspaper.

The plans, being devised by the Treasury and Department for Business, Innovation and Skills, are part of a growth strategy to be revealed alongside the autumn statement on November 29.

The Bank of England is this week expected to slash its forecasts for growth.

The Government hopes that private investors, including pension funds and insurance companies, will stump up money to fund infrastructure projects, but are still discussing how to create an investment vehicle to handle the cash.

Tapping into private sector cash would allow the Government to fund growth without jeopardising its deficit reduction targets.

Business secretary Vince Cable told the newspaper: “We know there’s a large amount of institutional investment in pension funds and insurance companies looking for a safe return.

“At the moment, it is extraordinary that foreign institutions will invest in British infrastructure but British companies won’t.

“What we have to do is create a framework of stable regulation so that private investors will have the confidence to invest in big projects and help get the British economy moving again.”

The plans are likely to fuel speculation that the Government is quietly switching to a ‘Plan B’ as the eurozone debt crisis threatens to derail economic recovery.

But a Treasury source told the newspaper: “This is about building the new economy of the future not addressing the short-term weaknesses caused by the eurozone.”

The plans will be on top of 40 infrastructure projects already in the pipeline, which include rail, road and national grid improvements. In particular, ministers hope to encourage growth in house building.