Six major insurers pledged to invest in schemes involving transport, energy, housing, health and education across the UK.
The combined funds from the investment alongside taxpayer’s money and receipts from the sales of assets including the Government’s 40pc stake in Eurostar will be used to boost the British economy through new infrastructure schemes.
The Government will publish its new National Infrastructure Plan containing more than £375bn of planned public and private projects to 2030 and beyond.
It has also made further announcements concerning its support for a number of new developments (see the list below).
- A memorandum of understanding with Hitachi and Horizon to support the financing of the development of a new nuclear power station at Wylfa in North Wales through a UK Guarantee
- £50m for a full redevelopment of the railway station at Gatwick Airport
- Strike prices for renewable energy
- Improvements to the A50 around Uttoxeter starting no later than 2015/16
- There will be no tolling on the planned A14 scheme between Cambridge and Huntingdon, construction of which is planned to start in 2016
- UK guarantee has now been agreed for the £1bn Northern Line extension to Battersea
- A new court for infrastructure to avoid unnecessary delays in the planning process for major projects
- Long-term plan for flood defences, including naming key projects by the time of the autumn statement 2014
- Look at options to bring private capital into the Green Investment Bank to enable it to operate more freely in delivering its objectives
Chief secretary to the Treasury Danny Alexander commented on the announcement as “a massive vote of confidence in the UK economy” to support £100bn of public investment to rebuild Britain over the next seven years.
Amongst the UK insurers are Prudential, Aviva, Legal & General, Standard Life, Friends Life and Scottish Widows who have made commitment following negotiations led by Lord Deighton, Commercial Secretary to the Treasury, and the Association of British Insurers (ABI).
According to the Treasury, the negotiations “ensured those capital rules incentivised life insurers to invest in a wider range of assets, including infrastructure projects”.
The pledge is the result of last week’s resolution passed by European Union’s Solvency II directive, which permits insurers to invest in a wider number of assets to deliver long-dated returns. It was announced by Lord Deighton and Danny Alexander, chief secretary to the Treasury, at the Institution of Civil Engineers in London.
Although the insurers have not yet specified schemes they will invest in, it is believed that they will be equally interested in investing into new as well as existing infrastructure.
The Markit/CIPS construction Purchasing Managers’ Index (PMI), rose to 62.6 in November, from 59.4 in October, well above the 50 level that divides growth from contraction and higher than a reading of 59 as predicted by economists’.
According to Markit, housebuilding in November rose at the strongest pace as rising confidence and attractive credit conditions helped to boost activity across the sector.
Katja Hall, the CBI’s chief policy director, said: “We’ve been calling for a more focused approach on infrastructure projects and look forward to seeing the fourth National Infrastructure Plan. As ever the devil will be in the detail on timelines and delivery.
“With the majority of national infrastructure projects earmarked to be delivered by the private sector, the insurance industry’s £25bn investment is good news.”