Minggu, 27 Mei 2012

Taxpayers will be forced to foot the bill if 'Plan B' ends in disaster

Taxpayers will be forced to foot the bill if 'Plan B' ends in disaster

By Dan Atkinson

PUBLISHED: 08:52 EST, 27 May 2012 | UPDATED: 08:52 EST, 27 May 2012

The Government’s ‘Plan B’ to kick-start growth, unveiled last week, will add tens of billions of pounds to Britain’s hidden public sector liabilities.

Guarantees to private companies working on housing and infrastructure projects will be kept off the balance sheet, along with most of the controversial private finance initiative contracts signed by Labour,

Financial Mail has learnt. Treasury officials are working on the details of the scheme, which was promoted last week by Deputy Prime Minister Nick Clegg as a relatively painless spur to get the economy growing again.

Plan B: Promoted by Deputy Prime Minister Nick Clegg as a relatively painless spur to get the economy growing again

Plan B: Promoted by Deputy Prime Minister Nick Clegg as a relatively painless spur to get the economy growing again

It is hoped that private firms will sign up for public works and housing projects once the Government promises to use the strength of its credit rating to underwrite the scheme.

‘The idea is to guard against excessive cost or extreme risk,’ a Treasury source said.

The Government is taking on huge liabilities that would fall on the taxpayer were anything to go wrong.

Such liabilities are kept off the nation’s balance sheet and so do not damage the Government’s reputation for austerity.

The Office for Budget Responsibility has identified £207 billion of similar liabilities, of which £175 billion related to State guarantees to stabilise the financial sector.

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