Chief construction adviser Paul Morrell says pension funds unlikely to invest in new infrastructure as it鈥檚 鈥榥ot their business鈥�
The government鈥檚 chief construction adviser has cast doubt on George Osborne鈥檚 plan to attract 拢20bn of investment from pension funds into new infrastructure that was a key pillar of the government鈥檚 growth strategy.
Paul Morrell told the Financial Times that it was unlikely that pension funds would invest in new-build infrastructure as it was 鈥渘ot their business鈥�.
He said: 鈥淚 think it鈥檚 a pretty common view that there won鈥檛 be a barrel-load of funding coming in from pension funds for greenfield [new] infrastructure. It鈥檚 not their business and I don鈥檛 know anyone who thinks it is.鈥�
Speaking ahead of today鈥檚 Government Construction Summit, Morrell said the government would need to come up with a guarantee that would underwrite the development risk on new projects.
He said: 鈥淚鈥檓 sure pension funds will come for brownfield developments - assets that are already built and earning. But with debt-funded projects, it鈥檚 a different story. [The pension funds] don鈥檛 like them. It will be a while before there is the 拢20bn investment in new infrastructure.鈥�
Update: In a statement, subsequent to the publication of the Financial Times piece, Morrell said 鈥渟ome of the views attributed to me have been taken out of context鈥�.
He said: 鈥淚 believe that, over time, pension funds will come in to fund unbuilt infrastructure assets. The challenge for the construction industry is that anyone contemplating such investment needs to be assured that the work will be both affordable and delivered in accordance with its forecasts. Working together, Government and the industry can make that so.鈥�
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