Major Scots projects look set for big Budget boost

Funding for Scottish Government infrastructure projects could see a major boost in the Budget, as Chancellor George Osborne announces measures to encourage pension fund investment in UK-wide construction and housing.

Among measures to open sources of non-bank finance, Wednesday’s Budget is expected to reveal progress in talks with the National Association of Pension Funds to establish a special-purpose vehicle to mobilise private finance investment into infrastructure projects.

In Scotland, discussions have already taken place with local authority pension funds and also with life assurance giant Aviva to help secure funding for new housing development and infrastructure projects.

Alex Neil, Cabinet secretary for infrastructure and capital investment, has set a £1 billion target for investment in social housing.

Banks are currently reluctant to “lend long”, while pension funds, faced with record low yields on government gilt-edged stock, have traditionally been long-term investors.

The Scottish Government is already working on three innovative bids, “which represent substantial, complex, but also potentially transformative approaches to using pension funds, capital markets and equity investment”, Mr Neil said yesterday.