Private savers will not be asked to fund infrastructure

Treasury sources have denied the government is looking into trying to raise money for housing and infrastructure projects by persuading private savers to invest in public “growth bonds”.

The Independent newspaper said today that George Osborne was looking to use the billions of pounds invested by small savers in banks and building societies to fuel new construction projects.

It said the Treasury was exploring whether savers could be persuade to transfer cash into growth bonds through National Savings and Investments, with returns underwritten by the government’s balance sheet.

However, Treasury sources said the report was “speculative” and that the department was not actively looking at such a plan.

Prime minister David Cameron asked the Treasury last month to look more widely at the idea of encouraging institutional and sovereign wealth fund investment in major projects by offering selective government guarantees on the returns on those investments.

Cameron was forced to act because of slow progress on this issue, despite the Treasury already pledging to look into the use of government guarantees when the National Infrastructure Plan was launched in November 2011.

Sources said that contrary to the Independent story this move does not include the idea of tapping individual UK savers for the funding for major projects.

Pension funds and sovereign wealth funds are seen as much more viable sources of large-scale funding than small private savers.

A spokesperson for HM Treasury said: “As the prime minister said last month, the government is looking at ways to use the UK’s credibility, through the use of its wider balance sheet, to support growth in the economy. Further details on this will be brought forward in due course.”