Plans by shadow chancellor Alan Johnson would see £9.5bn more invested every year than Coalition
A Labour government would invest £9.5bn extra each year on capital projects – 50% more than the Coalition government – under plans set out by shadow chancellor Alan Johnson yesterday.
In his first set piece speech as shadow chancellor, Johnson said he would largely stick by former Labour chancellor Alistair Darling’s plans to halve the deficit by 2014/5. However, a spokesperson for Johnson confirmed this morning that he would put more than previously outlined in to capital spending needed to support the economy and jobs, and would raise an extra tax on banks to pay for infrastructure and housing.
The spokesman said that over the spending review period this would amount to “tens of billions” of pounds extra for capital spend. The news comes amidst more reports that housing spend will be a big loser from tomorrow’s spending review, with expenditure halving from current levels.
The Labour Party claims that despite the Tories pledge to stick to Labour’s capital spending reductions, the plans in George Osborne’s emergency budget already showed annual spend £2bn lower by 2014/5 than Alistair Darling’s projections. Johnson’s speech yesterday said he would raised an extra £7.5bn annually from the banks, making the difference £9.5bn a year.
Under the Coalition plans public sector net investment would fall to £20bn annually by 2014/5, whereas under Johnson’s plans the figure would still fall, but to £29.5bn.
Johnson’s speech talked about a 33% cut in capital spend, which differs from the 50% cut figure normally used because of adjusting for inflation. He said: “The Government’s plans imply a 33% real cut in capital spending. If they adopted the approach I am outlining today the cut would be almost half that figure.
“The additional cash means that vital infrastructure projects could go ahead – keeping people in work now, and creating the environment for growth in the years to come. It means that the building of affordable housing can be targeted – recognising the irreplaceable role for the state in construction when private demand dries up.”
Johnson also said Labour would protect an £80m loan to nuclear manufacturer Sheffield Forgemasters which has been scrapped by the Coalition.