The Government should offer credit subsidies to pension funds and other institutional investors in order to unlock billions of pounds for infrastructure spending, the CBI says. In a new report, the business lobby group recommends that the Coalition should offer to underwrite part of the credit risk on major infrastructure projects in order to raise the credit rating of infrastructure bonds. Without this effective subsidy, according to the CBI, conservatively managed pension funds will not put up their money. \"By underwriting the credit rating of certain infrastructure assets, it can make them less risky and more attractive to investors,\" said the CBI director general John Cridland. The report says the Government could provide this support by offering to pick up a proportion of the losses if a project failed. The CBI adds that this Government intervention could lift infrastructure project bonds above the minimum BBB-investment grade targeted by funds. While these guarantees would create as contingent liability on the state\'s balance sheet, it would not undermine the Government\'s deficit reduction strategy - unless, of course, those losses materialised. According to the CBI, British banks, which have traditionally financed large infrastructure projects in their early stages, are still not functioning properly because of the financial crisis. \"This has made the financing of infrastructure projects particularly difficult to secure, and expensive,\" argues the report. The CBI says that the UK\'s pension funds are needed to fill the funding gap. \"If we can capture just a fraction of the £1.5bn of capital held in UK pension funds, and invest a further 2% of their of their total assets in infrastructure, this would make a huge contribution to renewing our energy, transport and other infrastructure,\" said Mr Cridland.