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UK to overhaul infrastructure contracts, seek savings
December 4, 2012 / 12:08 AM / 5 years ago

UK to overhaul infrastructure contracts, seek savings

LONDON (Reuters) - Chancellor George Osborne will overhaul the way the government handles infrastructure procurement on Wednesday, a source familiar with the matter said on Tuesday, and announce large savings on existing contracts.

Britain's Chancellor of the Exchequer George Osborne visits the offices of HM Revenue & Customs (HMRC) in central London December 3, 2012. REUTERS/Dominic Lipinski/POOL

Osborne, under pressure to boost Britain’s flagging economy when he updates his economic forecasts on Wednesday, will demand that the taxpayer has a board seat and a share in the profits of companies taking on public-private infrastructure contracts.

He will also consider introducing competitions where investors can bid for stakes in projects already underway.

Under pressure to find savings to get the Conservative-Liberal Democrat coalition government’s austerity plan back on track, Osborne will say he has found 1.5 billion pounds in savings from about 100 existing contracts in the last 18 months.

A further 1 billion pounds in efficiencies have been identified, the source said, but gave no details of the time frame for the savings.

Osborne could face higher government borrowing this year, a major embarrassment for the Conservatives, who have put cutting a record budget deficit at the heart of their economic policy.

A sluggish economy has played havoc with the government’s austerity targets since 2010 meaning Osborne may have to announce further spending cuts or a longer period of fiscal consolidation.

Reporting by Matt Falloon

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