Rachel Reeves is exploring ways to attract private investment to help speed up the development of a new generation of towns across the country.
Talks have begun between the Treasury, major banks and investment funds about using public-private partnerships (PPPS) to fund infrastructure needed for the projects.
The approach, which was first reported by the Telegraph, would be a successor to the Private Finance Initiative (PFI), which was widely used under previous governments but later attracted criticism over costs and value for money.
Treasury officials have commissioned research from the British Infrastructure Taskforce, a group of leading investors, to examine how private funding could support developments that include homes, community facilities and transport links.
It is believed the proposals will likely face opposition from some Labour MPs, who have previously condemned the use of private finance in public projects such as hospitals and schools.
In November 2021, around 40 MPs fought against the idea to use a combination of taxpayer money and private finance to build new Neighbourhood Health Centres in every community.
The government has identified seven locations for new towns, many on the edges of existing cities. These include Thamesmead in South East London, Tempsford in Bedfordshire and regeneration projects in parts of Leeds and Manchester.
However, plans for a site in Enfield recently faced scrutiny after the boroughs Conservative council said it would reject the proposals.
Ministers said progress on the new towns has been slowed by rising construction costs, planning constraints and shortages of skilled workers.
More recently, Reeves pointed to projects such as the £4.6bn Thames Tideway Tunnel and the Sizewell C nuclear power station as examples of infrastructure funded through similar model known as the Regulated Asset Base (RAB).
Under the RAB system, private investors fund and operate infrastructure projects and recover their costs through a regulated income stream over time. The government has also expanded the model to include road projects through the Highways (Financing) Bill.
A Treasury spokesperson said: ‘The government is not bringing back the old PFI model.
‘A generation of new towns is an exciting opportunity to create communities at scale, and transform the way that housebuilding is carried out in this country, unlocking economic growth.’
They added: ‘We will continue to consider the ways in which private finance can support the delivery of wider infrastructure ambitions including leveraging private finance to help deliver the next generation of new towns.’
Image: Towfiqu barbhuiya/UnSplash
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