Chancellor gives green light to major regional projects and announces regional growth fund for next two years
George Osborne in his Emergency Budget speech has said that capital spending will not be subject to further cuts.
The chancellor also announced the setting up of a regional growth fund to finance capital projects over the next two years, although it is unclear where the funding for this will come from.
Projects that have been given the go-ahead include:
- The upgrade of the Tyne and Wear Metro
- extension of the Manchester Metrolink
- redevelopment of Birmingham New Street station
- improvements to the rail lines to Sheffield
- Rail link between Liverpool and Leeds
Speaking in the House of Commons he said captial spending had been cut too much in the early 90s.
He added that capital projects would be priorised if they could be shown to have a “significant economic return to the country.”
Commenting on the announcements, EC Harris’ head of public Graham Kean, said: “It was fantatic to see capital projects figures so early in the speech, and that this government recognises the broader benefits from properly targeted programmes of work it is up to us now to deliver…”
Government states its commitment to infrastructure projects
The Government recognises the important role investment in infrastructure plays in supporting economic growth and UK competitiveness. As the Government acts to reduce the fiscal deficit, it will continue to encourage increased funding for infrastructure projects from the private sector. It will target public sector investment in infrastructure on those projects with the greatest economic benefit for which private sector capital is not available.
As set out in the deficit reduction section of this chapter, apart from the capital element of the £6.2 billion savings in 2010-11 (worth £2 billion a year until 2015-16), the Government will make no further cuts in public sector gross investment compared with the plans that it inherited. Instead it will undertake a fundamental review of all capital spending plans to ensure they are affordable and to identify the areas of spending that will achieve the greatest economic returns.
Budget text on the regional growth fund
[…] to help areas and communities particularly affected by reductions in public spending make the transition to private sector-led growth and prosperity, the Government will create a Regional Growth Fund in 2011-12 and 2012-13. This Fund will operate in England only and support increases in business employment and growth. The Devolved Administrations will be encouraged to undertake similar action.