UK - Pension funds could be targeted for investment in a £1bn (€1.25bn) UK regional fund, set up to invest in small-scale and transport infrastructure projects. 

The fund - the brainchild of the East of England Development Agency (EEDA) - will fund capital investment in the absence of available credit.

In addition to banks and public-sector funding, EEDA is seeking "creative funding mechanisms" in line with a recently-announced government initiative requiring regional development agencies to plug infrastructure funding gaps.

"We need to understand how funding will work, and the mechanisms available," said EEDA spokesman Adrian Ient. "We're being a bit smarter about spending money already available and how we raise funds."

He added: "Pension funds might be one of the sources we look at. We have to think creatively. There's a short-term credit crunch but we're looking at long-term growth. We don't have preconceived ideas of where the funding will come from."

A team of consultants, led by Hewdon Consulting, will work up options for the fund before next April. One of those officials, Patrick Warr of PKF, told IPE Real Estate draft legislation on construction contracts currently before Parliament could affect the sustainability of the fund.

He also cautioned the go-ahead would depend on a consensus between central and local government. "There are always issues between central and local government, and regional development agencies sit in the middle," he said.

"We're putting our effort into consulting with them. There's the funding issue, but there's also an issue around political management.

"No-one questions that the infrastructure fund would be useful. The tricky bit is getting the money and making it work," he said. "There are two issues: how do we get the fund going fairly quickly and can we grow it to a reasonable size and replenish it at a reasonable rate? We're encouraging private-sector investors but they'll want to know what they're getting for their money."

Despite early slippage - a Treasury deadline for proposals came and went at the end of March - he said he expected the government to adhere to a deadline of April 2009. 

The fund will initially focus on small infrastructure and transport projects. "Those are areas where we see a need for funding, especially mixed-use and housing, but we'll look at them all. We have no firm ideas about which programmes will be covered by the fund," said Ient.