A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:
Economic infrastructure is essential for our society to function. It gets people from A to B and keeps shops stocked and homes heated. It lies at the heart of encouraging the growth we desperately need to boost our flagging economy and promote the UK as an attractive place to invest.
The government expects £310 billion of investment in new infrastructure projects to be taken forward to 2015 and beyond. The government is pinning its hopes on persuading private investment to wholly own and finance 63 per cent of this sum. However, the government’s indecision over infrastructure policy deters investors who seek certainty in exchange for long-term financial commitments.
A shift towards relying on private investment will inevitably see consumers picking up the tab through higher energy and water bills, internet charges and train fares. Consumers will be exasperated to hear that the government has not even made the effort to assess the future impact this will have on their already hard pressed household budgets.
The government needs to provide certainty to encourage investors and clarity about the impact on consumers. The Treasury needs to focus much more on what could go wrong rather than simply hoping for the best. Demand forecasts must be rigorously tested to avoid taxpayer exposure to the costs of flawed projects. The Treasury’s proposal to issue guarantees to encourage new finance will need careful monitoring to ensure the taxpayer does not get hit with extra expense.