Six of the UK’s biggest insurance firms have announced they will invest £25bn in government projects.
Legal & General, Prudential, Aviva, Standard Life, Friends Life and Scottish Widows – part of the Lloyds Banking Group – will put the money into a revamped National Infrastructure Plan from the Treasury, which will provide a £375bn fund for infrastructure schemes, including rail, roads and broadband roll-out – up from £309bn in 2012.
Particulars of how the money will be split remain vague, with more detail expected in tomorrow’s Autumn Statement from chancellor of the exchequer, George Osborne. However, chief secretary to the Treasury, Danny Alexander, today claimed the industry investment was a “major vote of confidence” from the private sector.
He admitted to the BBC the UK had "underinvested... over several decades" into infrastructure, but added: "The most important thing we've done as a government is create an environment in which people want to come in and invest in British infrastructure.
"There are projects going on in every part of the country."
Specific projects that have been confirmed include £50m towards the redevelopment of the railway station at Gatwick Airport, £1bn for an extension to the Northern Line out to Battersea and improvements to the A14 near the port of Felixstowe.
It is thought the insurance firms were waiting for a decision on new European Union legislation on Solvency II, which could have required the companies to have had a lot more capital to ensure they could meet their promise to life insurance customers, before confirming their involvement. However, the clause was removed in November 2013, meaning they could invest their cash elsewhere.
The government is set to sell its 40% stake in Eurostar to put more money into the pot, with a goal of £20bn – up from an initial target of £10bn – for its corporate and financial assets. It plans to start selling in 2014 and rid all assets by 2020.