INDUSTRY groups came out in favour of the Treasury’s new UK Guarantees scheme yesterday, but economic think-tank the Institute of Economic Affairs (IEA) was opposed.
“The business community will be heartened to see signs of innovative thinking on infrastructure financing,” said Adam Marshall at the British Chambers of Commerce. Other business lobby groups including the Institute of Directors and the Confederation of British Industry (CBI) also voiced support.
But independent think-tank the IEA took the opposing view, suggesting that funds might find their way into vanity projects.
“The plan is likely to produce wasteful, loss-making infrastructure that would never have been constructed without artificial support,” said Richard Wellings, the IEA’s head of transport.
The scheme will underwrite up to £40bn of infrastructure investment projects judged to be in the country’s interest, in need of a guarantee, and fiscally sound.
The director for the Institute of Civil Engineers Nick Baveystock centred his criticism on the criteria limiting guarantees – arguing that getting taxpayer support should not be “excessively difficult”.