Treasury considers help for infrastructure funding gaps

Britain is considering ways to help plug funding gaps on private sector-financed infrastructure projects, the Treasury said today, as pressure grows on government to do more to bolster the economy.

There are concerns that banks' reluctance to lend because of the credit crisis -- especially over long periods -- has held up privately-financed and operated projects, forcing the government to consider how to fill any holes in funding.

"Like all private sector investment projects, the global credit crunch is affecting private finance initiative (PFI) projects," a Treasury spokesman said.

"That's why we've been working with individual projects and local authorities and considering measures to help them close."

Although any broad details have yet to be nailed down, the measures could involve direct lending from government departments, the creation of a fund for long-term loans financed by public money or guarantees for private lenders.

PFIs were introduced as a way for government to fund infrastructure projects through long-term borrowing from the private sector, thus avoiding the immediate use of taxpayers' money.