Massive public infrastructure projects like the Future Hospital could be made possible through private funding under controversial new plans being developed by the government’s Chief Executive, Express has learned.
Charlie Parker has said that one of his key priorities for 2019 will be developing an ‘Investment Fund’.
The move, which was briefly referenced in the ‘One Gov – One Year On’ report, would involve partnering with local or international firms in order to finance large-scale public works and long-standing maintenance issues, rather than borrowing money or dipping into the government’s rainy day fund.
Pictured: Creating an 'Investment Fund' was listed as a priority in the 'One Gov - One Year On' report.
A government spokesperson explained: “Establishing an investment fund would be on the principle of using the States’ balance sheet more effectively to create a joint investment vehicle with internationally-recognised funders. These could be from Jersey (e.g. banks, investment houses, etc), to enable the Government to tackle some long-term infrastructure issues, which have not been funded for decades.
“This represents a potentially better use of public monies to fund the costs of significant capital projects (rather than taking out loans or depleting reserves).”
They added that feasibility work would be undertaken throughout 2019, with no firm decisions on how such a scheme would operate made as yet.
The news comes just weeks after Mr Parker warned that the island shouldn’t be complacent about the state of its Strategic Reserve, which between 2009 and 2017 had £340million withdrawn from it to balance the government’s finances. There have also been plans to fund the construction of the Future Hospital by using money from what is widely regarded to be the island's emergency supply.
Pictured: Charlie Parker during a recent IoD breakfast briefing, where he made the comments about the Strategic Reserve.
He continued: “People talk about the rainy day fund because it’s got a couple of noughts in it that it’s enough. Actually, I said right from the beginning that I felt that it was under-capitalised. Treasury has felt that as well, and this government recognises that it is going to have to do something.”
Turning to private funding for public infrastructure projects is something that has proven controversial in the UK.
Private Finance Initiative (PFI) contracts – a way of financing public sector projects through the private sector – were first introduced by the UK government in the early 1990s and gained further traction throughout the 2000s.
However, the Office for Budget Responsibility described them as a “source of significant financial risk to government”, while other critics suggested that such contracts allow businesses to profit, even if the services or builds they deliver are of poor quality and leave the government struggling under heavy loan repayments following a series of high-profile disasters.
Pictured: UK Chancellor Philip Hammond abolished new PFI contracts in October last year.
Then, just six months ago in October, Chancellor Philip Hammond announced that he would be putting a stop to PFI for all future projects following the collapse of construction company Carillion.
Announcing the move during his 2018 Budget Statement, he said: “Half of the UK’s £600 billion infrastructure pipeline will be built and financed by the private sector. And in financing public infrastructure, I remain committed to the use of public-private partnership where it delivers value for the taxpayer and genuinely transfers risk to the private sector.
“But there is compelling evidence that the Private Finance Initiative does neither… We will honour existing contracts, but the days of the public sector being a pushover must end. We will establish a centre of excellence to actively manage these contracts in the taxpayers’ interest starting in the health sector.
“And we will go further. I have never signed off a PFI contract as Chancellor, and I can confirm today that I never will.”
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