Jump to content
House Price Crash Forum
Sign in to follow this  
Mickey

Infrastructure Bond

Recommended Posts

Bear with me a bit ....

Strikes me that the UK is going to be in no position for a number of years to invest in major infrastructure projects. Also, private institutions like banks are starved of capital.

During the second world war the general public were given the opportunity to purchase war bonds with their savings for a modest but guaranteed return. Why not fund desperately needed large scale infrastructure development through a similar route?

One of the reasons why the early nuclear reactors were so profitable for the UK was that they were built by borrowing the capital from the government at a relatively modest discount rate - around 5-6%. If replacement reactors were funded privately, the banks etc. would probably expect 10% return or more.

Personally, I would be quite happy to invest half my savings in a new nuclear reactor at a rate of return of around 5-6%. The return might be over 20 years with your investment tied up during the first 5 year construction phase but that would be OK with me.

The only disadvantage I can see is that a body would be needed to manage the investment fund. The capital cost of a nuclear power station is enormous (1.5-2.0 billion) so I can't imagine many banks leaving such a fund alone without wanting to 'invest' it.

Don't get hung up on the fact I have chosen a nuclear reactor as an example. I appreciate that some people don't like them. It could be the new high speed rail link or the M6 toll motorway or the Severn barrage or a new airport runway. I just want to know if all you clever people can see any downside to allowing the general public to invest directly in revenue generating infrastructure projects that they might want to support.

The long timescales and having your money tied up are a problem. However, given the way I feel about the banks at the moment, I would be up for an infrastructure bond. It would have to be a specified project however and not another general slush fund for the government to dip into.

Share this post


Link to post
Share on other sites

Bear with me a bit ....

Strikes me that the UK is going to be in no position for a number of years to invest in major infrastructure projects. Also, private institutions like banks are starved of capital.

During the second world war the general public were given the opportunity to purchase war bonds with their savings for a modest but guaranteed return. Why not fund desperately needed large scale infrastructure development through a similar route?

One of the reasons why the early nuclear reactors were so profitable for the UK was that they were built by borrowing the capital from the government at a relatively modest discount rate - around 5-6%. If replacement reactors were funded privately, the banks etc. would probably expect 10% return or more.

Why would any government want to do this when they can give the funding aspect to their PFI buddies who will then give them lucrative contracts upon "retirement" from parliament?

Share this post


Link to post
Share on other sites

Why would any government want to do this when they can give the funding aspect to their PFI buddies who will then give them lucrative contracts upon "retirement" from parliament?

+1. Red Ken tried to have something similar as an alternative to PFI of the tube, but was blocked by the government. Yeah, what a great idea that was.

The specific issue with nuclear, is who gets to clean up afterwards. That is multiples more expensive than the build.

With other infrastructure projects, the idea is good until the banksta's get their greedy mits on the money.

Share this post


Link to post
Share on other sites

During the second world war the general public were given the opportunity to purchase war bonds with their savings for a modest but guaranteed return. Why not fund desperately needed large scale infrastructure development through a similar route?

As someone already said, it's called PFI. Your modern war bonds are the shares or bonds of companies involved in PFI.

So now there's competition and risk in your war bonds. They're no longer money for nothing.

I too would be happy to invest in nuclear infrastructure. I have a decent amount in renewables, but opportunities for nuclear in the UK are basically ... well, erm, ... french. And my (lack of) grasp of the language leaves me at a disadvantage.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 141 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.