# = pounds sterling

HM Treasury News Release
215 /98                                       21 December 1998
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      2 1/2 BILLION POUNDS FUND LAUNCHED TO SUPPORT THE REFORM AND
                MODERNISATION OF PUBLIC SERVICES

A new 2 1/2 billion Pounds fund to support innovative investment  projects
which modernise and reform public services was launched today by
the Chief Secretary, Stephen Byers.

The fund, to be called the Capital Modernisation Fund, will be
allocated to departments on a competitive basis.  It will be in
addition to the capital funds already allocated to individual
departments.

As part of the Public Service Agreements published last Thursday,
each department has to draw up its own Departmental Investment
Strategy setting out how capital budgets could be used to
modernise and reform public services and to assist in achieving
a department's performance targets.

Launching the Capital Modernisation Fund Stephen Byers said:

     "The Capital Modernisation Fund will be used to support
     genuinely new and innovative projects which will improve
     the delivery of public services and the management of
     assets.

     Alongside the recently published public service agreements
     this fund will play a key part in our agenda to reform and
     modernise our public services.

     The competitive bidding process itself is a new approach
     for government departments.  We are confident that it will
     lead to high quality projects being put forward.

     Because this will be extra money for individual departments
     it means that additional funds could be allocated to
     schools and hospitals if the proposals put forward raise
     standards and improve the quality of provision."

1 billion Pounds will be available in 2000-01 and a further 1 1/2 billion
Pounds in 2001-02. A second competition will be held at the end of 1999.



NOTES TO EDITORS

1.   The Capital Modernisation Fund (CMF) will be managed by the
     Treasury.

2.   Media copies of the bidding guidance are available from the
     Treasury Press Office on 0171 270 5238.

3.   Non-media copies of the guidance are available from the
     Treasury Public Enquiry Unit on 0171 270 4558.

4.   Separately, HM Treasury has today published a paper "Fiscal
     Policy: A New Framework for Public Investment".

5.   If you have access to the Internet, you can find this news
     release and other Treasury material at http://www.hm-
     treasury.gov.uk