The logic is to sell the rights to a road to a private company, get them to borrow from pension funds on the basis of the securitised income of the private company for running that road, which will be wholly paid by HM Government since road pricing is supposedly specifically ruled out, and then the road will be supplied to users in exchange for the tax they pay, as now.
Now let’s consider the alternative. The state borrows at much lower interest rates by cutting out the middleman and with its vastly better credit rating, pays a contractor to build the road and then runs it as part of its estate in exchange for tax paid with pension funds in exchange getting the long dated gilts they still need to fund pension obligations.
Which route will be cheaper? Glaringly obviously the second. But the government is opting for the first. The insanity of the Treasury’s phobia with debt that has fuelled the most expensive and inefficient off balance sheet borrowing programme anyone could conceive through PFI continues as a consequence.
That\’s just fascinating.
Isn\’t Ritchie the guy who says that we should all be investing our pensions in bonds so that the money can be used to build the infrastructure the country so badly needs?
Yet when someone suggests that our pensions should be invested in bonds to fund the infrastucture of the country he\’s against it?