New plans for growth?

 

As our political editor Nick Robinson can reveal they believe Mr Osborne could raise capital spending on infrastructure projects

The BBC can reveal that cabinet ministers believe that the chancellor could increase capital spending by up to £5bn on roads, broadband and other infrastructure projects in order to stimulate economic growth without abandoning its deficit reduction strategy or what's become known as "Plan A".

The government has already announced plans to "accelerate" spending on 40 key infrastructure projects; to reallocate half a billion pounds in unspent departmental budgets on a fund to boost local infrastructure projects - for example, building a link road to allow a housing development to go ahead; and to examine how to maximise the impact of existing plans.

An announcement is expected soon on a plan to increase house building.

The debate which is just beginning in government is whether to go further by increasing capital spending above and beyond the totals outlined in the Budget.

Currently the Treasury is arguing that it would risk a loss of credibility in financial markets to change their plans in any way.

The main business lobby group, the CBI, recently called on the government to "act now to attract vital new investment into the UK's ageing infrastructure. Swift investment across Britain's road and rail networks, digital, waste and energy would ensure we remain internationally competitive and kick-start UK growth".

The government has promised to publish a National Infrastructure Plan to set out the long-term investment needs and priorities for the UK by the end of this year.

Treasury figures show planned capital spending halving over the next five years once depreciation is taken into account.

Today's gloomy IMF forecast is fuelling the private debate in Whitehall as well as the public debate between parties about how to stimulate growth. Both Labour and the SNP have called for increased capital spending.

Note for nerds:

The reason some ministers argue that capital spending can be increased without abandoning Plan A is that the Treasury's so-called "fiscal mandate" aims to target current not capital spending.

Their other target - a fall in the debt to GDP ratio - limits their ability to spend more on capital projects unless the Treasury argues that it can stimulate growth in the future by spending more now.

 
Nick Robinson, Political editor Article written by Nick Robinson Nick Robinson Political editor

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Comments

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  • rate this
    +3

    Comment number 1.

    The IMF predict that next year UK output will be greater than most European countries including Germany..
    When most of our trading partners having shrinking economies I would say that was good news; no need for plan B.

    But don't let good news get in the way of a story.

  • rate this
    -13

    Comment number 2.

    No Plan B
    The deficit plan will be adhered to, to repair the mess left by Labour's incompetent running ( ruining) of our economy.
    World events have now required greater stimulus than estimated 18 months ago.
    I for one, am glad we have grown ups in charge of our country now after the Labour mess

  • rate this
    +2

    Comment number 3.

    Oh I see, a combination of fast hard deep cuts coupled with accelerated and or increased spending....must be that new 4th way I keep hearing about....

  • rate this
    +27

    Comment number 4.

    What does the media have against 'U-turns'. I'd rather politicians did what was right for the country and accept they've made mistakes than continue down the wrong path.

    Politicians are too busy trying to score political points, and the media too busy trying to sensationalise everything to have a rational debate about what is in the interest of this country.

  • rate this
    -6

    Comment number 5.

    Oh Dear, what matters most - looking good, or creating jobs that tax will be paid from (and getting people of benefits), reducing sucicides and limiting the impact of stress related ill health? At the moment our government have broadly the right idea but the way they are implementing is likley to fracture our society (riots in streets, suicides, giving up hope, crime to make ends meet, etc.

 

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