BRIGHTON, England (Reuters) - The British government will offer to guarantee private funding for its London Crossrail infrastructure project to ensure train carriages are delivered on time, Chief Secretary to the Treasury Danny Alexander said on Tuesday.
Tight market conditions have squeezed funding for big infrastructure schemes at a time when the Conservative-Liberal Democrat coalition government is looking to the private sector to engineer growth and create jobs.
Crossrail, a 16 billion pound ($26 billion) scheme which will join east and west London via the city centre, is Europe’s biggest infrastructure project and part-funded by city and national authorities.
Last year, Crossrail’s management said it had pushed back the tendering for 60 new carriages to 2014 from 2013 to save money, with Bombardier, Siemens, CAF and Hitachi seen as the main competitors for a contract worth around 1.2 billion pounds.
“Difficulties raising the necessary private funding in the market could delay their delivery,” Alexander said, according to extracts of a speech to the Liberal Democrat annual conference in Brighton.
“The train contract for Crossrail will be the very first project to be offered a new government guarantee.”
The coalition government, under pressure to do more to heal a recession-hit economy at the same time as slashing spending, has said it will use its balance sheet to underwrite private funding for infrastructure projects.
The government, which will contribute about 30 percent of the cost of the train contract, will guarantee 240 million pounds of the remaining funding to be sourced from the private sector. ($1 = 0.6174 British pounds)
Reporting by Matt Falloon; Editing by David Cowell