Budget 2013: Infrastructure spending boosted by £3bn a year

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Media captionOsborne: "By investing in the economic arteries of this country we will get growth flowing to every part of it"

The government says it will allocate an extra £3bn a year to infrastructure projects in the hope of boosting economic growth.

In his Budget speech, Chancellor George Osborne said the increase would come into effect from 2015.

Business groups welcomed the measure, but others warned it was "too little, too late".

The money will go towards new roads, railways, power stations and other large-scale projects.

It comes in response to growing calls from business groups to boost infrastructure investment as the UK continues its sluggish economic recovery.

"By investing in the economic arteries of this country, we will get growth flowing to every part of it," Mr Osborne told the House of Commons.

The CBI, a business lobby group, welcomed the announcement.

"This was recognition it was a mistake to cut capital spending so sharply and that other growth-boosting measures were taking too long," said John Cridland, director general of the CBI.

"By shifting £6bn to housing and infrastructure, the government has sowed the seeds for growth and jobs."

Homebuilder help

Deputy Prime Minister Nick Clegg has been among those who questioned the government's decision to cut capital spending when the coalition took power in 2010.

Some economists have argued that this latest injection of extra cash will not be seen for another two years, doing little to boost the economy in the short term, when growth continues to be broadly flat.

Businesses have been frustrated by the slow progress of new infrastructure projects, many of which have failed to leave the drawing board.

Official figures suggest spending on infrastructure fell in the last 12 months.

The Institute of Public Policy Research (IPPR), a think tank, called the measure "too little, too late".

It says the government should be prepared to borrow more in the short term in order to significantly increase infrastructure spending.

"Borrowing, say, an additional £30bn over the next two years to spend on infrastructure would have provided a real boost to growth - perhaps even allowing the [Office for Budget Responsibility] to upgrade its growth forecast for once," said IPPR chief economist Tony Dolphin.

The £3bn a year is due to come from extra cuts to government departmental spending - a result of government departments spending less than their budgets allowed last year.

Mr Osborne also announced measures to help homebuyers, including those buying new homes.

Homebuilders welcomed the measures. "Building the homes the country desperately needs can be a key driver of economic activity," said Stewart Baseley, executive chairman of the Home Builders Federation.