March 19, 2012
David Cameron unveils plan to sell off the roads
Sovereign wealth funds to be allowed to lease motorways in England, says prime minister
David Cameron will clear the way for a multibillion-pound semi-privatisation of trunk roads and motorways as he announces plans to allow sovereign wealth funds from countries such as China to lease roads in England.
Just 48 hours before the budget, the prime minister will give a speech calling for radical action to improve Britain's infrastructure, which is falling behind those of key competitors in Europe.
In his most eye-catching proposal, Cameron will announce that the Treasury and Department for Transport are to carry out a feasibility study looking at using private-sector funds to improve and maintain trunk roads and motorways.
The prime minister's plan, modelled on the funding of the mains water and sewage network, would see sovereign wealth funds and pension funds given the right to lease roads over a long period. They would be set a series of targets to, for example, reduce congestion and carry out improvements. George Osborne recently travelled to China to persuade the world's largest fiscal-surplus country to invest in Britain's infrastructure.
If the road companies met the targets they would receive a proportion of the vehicle excise duty, which currently all goes to the Treasury. This would be seen as a particularly radical step because it would be a form of hypothecation – allowing a stream of revenue to be directed at a particular project. The Treasury normally resists this because it likes to keep control of prioritising spending across government.
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