UK Treasury Chief Opens Wallet for Energy, Infrastructure
LONDON (Dow Jones), Feb. 12, 2010
U.K. Treasury chief Alistair Darling will use his upcoming budget to promote investment in U.K. infrastructure and energy supplies, he is expected to say in a speech Friday.
Darling will announce plans Friday to set up a new body, Infrastructure U.K., which will be tasked with drawing up in time for the budget a strategy for developing the country's infrastructure and the funding needed to secure it.
"A modern communications network and reliable power supply, for example, are both criticial to competitiveness," he is expected to say, according to excerpts of his speech provided by the Labour party.
"We need to ensure we have safe energy supplies -- including in renewable and nuclear energy."
The Labour party has been in power since 1997.
Long an energy exporter because of its North Sea oil supplies, the U.K. has become a net importer in recent years. That has led to concerns that U.K. energy prices could rise sharply in coming years, with a report by energy regulator Ofgem this month saying private-sector investment could fall short of what's needed to secure the U.K. has sufficient energy supplies by as early as 2015.
The U.K. government has undertaken several initiatives to boost energy supplies, with the government backing controversial plans for an expansion of nuclear power and the treasury offering tax breaks and other incentives to increase North Sea oil production and energy supplies from renewable sources.
Last month, the treasury offered tax breaks of up to GBP160 million to companies exploiting fields in the West of Shetland region.
The government has also spent billions of pounds on infrastructure projects in recent years. But with the U.K. facing soaring budget deficits, the treasury had planned to cut back capital expenditure in coming years.
The treasury hasn't yet announced a date for the budget, but reports suggest it could be in late March. Prime Minister Gordon Brown must hold a general election by June 3.
In Friday's speech to a conference on Scotland's recovery from the recession, Darling is also expected to say he will use the budget to promote high-technology business start-ups.
Echoing comments from Business Secretary Peter Mandelson over recent weeks, Darling is due to say the government will look at ways to help research companies turn innovative ideas into money-making businesses.
"I am struck by how much research is coming out of U.K. universities, but with 18 universities in the world's top 100, we should be seeing even more spin-off companies," he is due to say.
Darling is expected to take a positive line on the U.K. economy's propsects, saying he is "confident we will lock in economic recovery."
The U.K. economy grew for the first time in 18 months in the fourth quarter, albeit by an anemic 0.1%. Data Thursday showed U.K. home repossessions fell sharply in the fourth quarter, although they hit a 14-year high in 2009.
In comments late Thursday, ahead of his speech, Darling is due to hit out at the opposition Conservatives over their economic policies.
With the Conservatives so far not detailing how much they will cut spending by this year, Darling will say "we have a clear plan to halve the deficit in four years."
"As I speak they appear to have no plan. Or no plan they are willing to share," he is also expected to say.
The Conservatives have said they would cut spending in 2010 to tackle the U.K.'s mounting debts whereas the government has said spending cuts must wait until 2011, when the government expects the recovery to be entrenched.
However on Thursday, following comments from Business Secretary Peter Mandelson saying significant cuts will be penciled in across government departments "in the course of this year or so," the Conservatives claimed it was Labour's plans that were in chaos.
Philip Hammond, the number-two person in the Conservative treasury team, said Mandelson's remarks undermine the prime minister's argument that Conservative plans would put the economy at risk.
"People will be asking, who speaks for the government now -- Peter Mandelson or Gordon Brown?" Hammond said.
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