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Government in talks with Qatar over £10bn infra boost for schemes like Hinkley Point C and super sewer

The UK government is in talks with Qatar to set up a £10 billion fund to invest in British infrastructure projects, it was reported today.

Ministers from both sides are understood to have had discussions about the type of schemes the Qataris could invest in, and whether a specific fund could be set up.

They discussed the new £14bn nuclear reactor at EDF’s Hinkley Point C, energy plants, road and rail projects and the Thames Tideway Tunnel “super-sewer”, the FT reported this morning.

The newspaper says the British government is also keen to capture international investment for new gas plants and wind farms as it moves away from coal-fired power stations.

CN reported this week that Balfour Beatty is bulking up its energy services and considering acquisitions as it hones in on the gas-fired power station market.

Qatar has already invested heavily in existing assets, including a 20 per cent stake in Heathrow Airport Holdings, The Shard, Harrods, the US Embassy, and is also funding the £3bn redevelopment of Chelsea Barracks.

The FT says discussions are still ongoing over how any fund would be structured and what return the Middle Eastern investors would get.

CN reported last month that both Chinese investors and contractors had been to the UK with an interest in the infrastructure market and potential jvs with British firms.

Graham Robinson, global business consultant at Pinsent Masons, welcomed the potential Qatari injection at a time “almost all other options have failed to deliver sufficient funding to invest in Britain’s congested and crumbling infrastructure”.

He also pointed to Chinese investment and highlighted Canada, Singapore, Australia and other Gulf States.

“Our view is that significant investment from China and other nations, hungry to invest in solid infrastructure assets is about to happen.

“This will provide the UK infrastructure sector with the necessary funding to get on and build the infrastructure that Britain needs which in turn will power Britain’s stagnating economy.”

Chinese investors have already taken a 10 per cent stake in Heathrow Airport, a stake in Thames Water and is understood to be looking at the new Co-operative building in Manchester.

Mr Robinson added: “China in particular wants to stamp its mark on UK infrastructure and also supply significant volumes of cheaper construction equipment and materials directly from China into the UK market as its own domestic market slows and it changes its focus towards investment into developed countries.”

The Treasury is continuing with UK Guarantees, which have been given to the Northern line extension and, as CN reported in December, the £700m Drax power plant conversion.

Pension funds last week said they would consider investment in UK infrastructure if the construction risk is taken on elsewhere, potentially through UK Guarantees.

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