By Richard Johnstone | 27 June 2013
The government will fund or guarantee £300bn of capital spending by the end of the decade, Chief Secretary to the Treasury Danny Alexander has announced.
Outlining the government’s infrastructure spending plans following yesterday’s Spending Review for 2015/16, Alexander also confirmed that a £2bn Single Local Growth Fund would be devolved to Local Enterprise Partnerships from 2015/16. This money will be guaranteed until the end of the decade.
Among the schemes announced today, Alexander said the government would spend an extra £3bn on housebuilding across three years from 2015/16. This ‘transformative’ investment would be enough to build 156,000 new affordable homes. This would provide more homes, on average, than in any of the past 20 years, he added.
It was also announced that the £40bn UK Guarantees programme would back more projects. The programme, which underwrites capital schemes that have stalled because of adverse credit conditions, will also be available for two more years to December 2016. It has already been used in the revamp of the Drax Power Station and extension of the London Underground’s Northern Line. Now it will guarantee funding worth £500m for Mersey Gateway Bridge and a ‘multibillion pound’ amount to assist the construction of a new nuclear power station at Hinkley Point, Alexander said.
He added that the government would also spend more than £28bn in the six years from 2014 on enhancements and maintenance of national and local roads. This money will include £6bn to be given to councils to repair local potholes.
To achieve this programme, the Highways Agency is to be reformed from an executive agency of the Department for Transport into a publicly owned corporation.
Alexander said this meant the organisation could be given ‘long-term funding certainty and flexibility’ to implement the spending programme for the major road network.
He also confirmed that the budget for the proposed High Speed 2 rail line between London and Manchester and Leeds would be set at £42.6bn, almost £10bn more than previously thought.
This sum included a contingency fund for the scheme, he said, which reflected best practice following the construction projects for last year’s Olympic and Paralympic Games in London.
‘Yes, this is a higher overall budget than previously put forward. We are learning from our Olympic experience – setting a long-term, realistic financial plan with the right contingencies,’ said Alexander.
‘This is the longest and largest transport budget the Treasury has ever set aside, and the people running the project will have to deliver within it. This is a project that will change the economic geography of our country.’