Will Hutton wrote a good piece in the Guardian on Monday on the obvious need for the use of bond finance to pay for the infrastructure development this country needs. I explored this here last week.

In his article Will Hutton said:

The heart of the problem is the Treasury's attitude towards public debt and the way it calculates the payback from public infrastructure projects. In many ways, the Treasury has made significant strides; its work on poverty, the pre-budget report and the quality of analysis on the case for and against the entry into the euro were examples of thoughtful public policy development at their best. However its approach to infrastructure spending remains in the dark ages - an outlier of 19th-century thinking.

Essentially, the Treasury does not believe in publicly financed infrastructure spending. It sets the narrowest possible criteria for calculating benefits and then establishes a close to absurd framework for the thus priced infrastructure project to be financed. Every pinchpoint on the motorway system; every failed signal box; every overcrowded railway line roots back to the Treasury's rules.

He continued:

It is particularly galling for outsiders - indeed for anybody who uses public transport - given the innovativeness of the private sector in using debt. I am critical of what private equity companies do when they take over public companies using billions of pounds of debt; but I admire their chutzpah - and wish the same attitude could be imported into the Treasury. If the amount of debt private equity companies had incurred buying Boots, and had planned in their ambitions for EMI and Sainsbury, were spent on rail, with one jolt Britain could be catapulted into the 21st century.

Why not? Why should it be possible for the full partners of a couple of private equity companies to shoulder tens of billions of debt and not the British rail system? Why is that risk deemed so much less than the risk of improving public transport? Why is public debt to acquire and build public assets regarded as the work of the devil but private debt on a larger scale to asset-strip our great companies regarded as benign?

His argument is entirely logical. And correct. Think what £9 billion could do for the rail system. And it added no value at all when used to simply transfer the ownership of Boots.