Chief secretary to the Treasury Danny Alexander will tomorrow set out the government’s plans to spend £100bn in infrastructure before the end of the decade, after a spending round which left more questions than answers.
The chancellor pledged a commitment of £50bn in capital investment in 2015 from “roads to railways, bridges to broadband, science to schools”.
He said there would be a capital budget of £9.5bn for the Deparment of Transport each year until 2020.
But he admitted that Transport for London running costs and rail administration will be forced to make a 9 per cent saving in its day-to-day resource spending.
The official spending review document said there would be “a 5.5 per cent real terms increase in capital provision for critical transport infrastructure”.
This could see cuts to road and rail day-to-day maintenance but further investment in new transport schemes.
BBC economics editor Robert Peston tweeted: “Increase in departmental capital budgets much less than implied. Public sector gross investment actually unchanged 2015-16, at £50.4bn ie no change in capital spending, in gross terms between 2014/15 and 2015/16.”
Tomorrow Mr Alexander will set out the detail behind the spending review and long-term capital spending plans in what is described in the spending review documents as Investing in Britain’s Future.
Mr Osborne said: “The Department for Transport will make a 9 per cent saving in its day-to-day resource spending, bearing down on the running costs of Transport for London and rail administration.
“But its capital budget will rise to £9.5bn – the largest rise of any part of government. And we will repeat that commitment for every year to 2020.
“We’re already massively expanding investment on major road schemes; but we will do more. So we’re announcing the largest programme of investment in our roads for half a century.
“We’ve already expanded our investment in the railways. But we will do more.
“So we’re committing to the largest investment in our railways since the Victorian age, and with the legislation before this House today, we should give the green light to High Speed 2 – a huge boost to the North of England and a transformation of the economic geography of this country.”
Asked after his announcement about the split of public and private investment, Mr Osborne said transport would be largely publicly funded but offered the opportunity to “leverage private investment”.
He said governments have all had the challenge of how to deliver infrastructure with the planning system as it is. “We are reforming planning and are also going to be setting out changes this week to infrastructure delivery in Whitehall. We’re going to do our best to put it right.”
In the debate after the chancellor’s speech, he was asked why people should have confidence that he will deliver following a “record of complete failure on infrastructure spending”.
Mr Osborne said the road schemes they have announced have planning permission or are getting their planning permission, with the same for schools and other infrastructure.
He said when they came to power there was a “complete absence” of a plan for infrastructure and that Labour had opposed planning reforms need to deliver schemes.
CECA director of external affairs Alasdair Reisner said: “While we are keen to see the details of these projects, and recognise that this return will only occur through their actual delivery, industry should welcome today’s announcements as evidence that the Treasury has recognised the substantial multiplying factor infrastructure investment will return to the British public.”
Aecom director for programme, cost, consultancy Andrew Wheeler said: “While we need to wait for Danny Alexander’s capital expenditure announcements, the government’s commitment to restart the civil nuclear programme is good news for the energy industry, and the underpinning of this with the Nuclear Guarantee will provide assurances and reduce risks to allow funding and development to move forward.
“The news regarding shale gas is vital in providing the UK with a diverse and resilient source of energy; the announcement will provide stimulus to grow the infrastructure capability of the UK and for us the lead the way in harnessing this source of energy.”
WSP head of Infrastructure Duncan Symonds said: “Government appears to be recognising and addressing two fundamental issues that have long plagued this vital sector. One, that effective and efficient infrastructure is key to economic growth and the UK’s is below par, and two, that we can’t afford to lose specialist skills, confidence and momentum through long periods of inactivity between projects.
“However, we mustn’t forget that while the big red tape projects are important, the smaller less sexy projects, like flood defences and maintenance programmes are equally important and in some case can have more immediate impact on the economy, creating jobs and building asset value.”