Heads of the Valleys A465 upgrade from £300m borrowing

Roadworks to create a dual carriageway at the heads of the south Wales valleys will finish on time thanks to a new way of raising money, the Welsh government says.

A partnership with the private sector will generate £300m to widen the final two sections of the A465.

It will mean the road from Neath to Abergavenny is turned into a dual carriageway by 2020 as planned.

Officials say the scheme is less risky than private finance initiatives.

A second funding pledge will raise £200m to pay for building schools.

The Welsh government made the announcement as AMs were asked to approve its £15bn budget for next year.

Ministers want to set up a scheme that will raise £300m of private finance, which the Welsh government will repay over 30 years, to dual two parts of the A465 Heads of the Valleys road near Merthyr Tydfil.

The road from Hirwaun to the junction with the A470 and from the A470 to Dowlais Top are the last two sections to be turned into dual carriageway.

Built as a three-lane road in the 1960s, there have been plans to widen the A465 since the mid-1990s.

Risk

A so-called non-dividend vehicle will be set up to finance the work needed to complete the dualling.

Officials say the scheme will mean a smaller risk for the taxpayer than private finance initiatives which critics say saddle the public sector with big debts. It could include a cap on the profits of the private companies involved.

The final sections of road to be dualled are between Hirwaun and Dowlais

There are plans to use the same means of raising money in the future to pay for other infrastructure projects.

The commitment on school buildings will give local councils up to £12m a year for 30 years.

They can use that money to borrow £200m which will pay to finish the Welsh government's 21st Century Schools programme ahead of schedule in 2018-19.

The same process has been used to pay for road repairs.

The Welsh government cannot borrow money itself, although it has an agreement with the Treasury to give it some limited borrowing powers in the future.

Ministers in Cardiff have been looking for other "innovative" ways to make up for cuts to their capital budget.

Finance Minister Jane Hutt said: "The initiatives I have announced today show that despite the cuts being imposed on us by the UK government we remain determined to invest in infrastructure across Wales.

"Not only will this infrastructure investment allow us to continue to provide the best schools, hospitals and roads but it will also support the construction industry and provide much needed jobs."