Energy and roads get share of Â£100bn

27 June 2013 Last updated at 03:22 ET

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Osborne: "We've got a long-term plan now as a country to up our national game"

George Osborne has said the UK needs to spend more on its energy and transport infrastructure if it is to create jobs and compete in the global economy.

The government will reveal on Thursday how £100bn will be spent from 2015-2020 on projects including nuclear and new sources of energy, including shale gas.

The chancellor said shale gas could be a "real boon" for the UK economy.

But it is unclear how soon projects will start construction and Labour says investment is needed sooner.

The details of the infrastructure boost will be announced by Chief Secretary to the Treasury Danny Alexander in the Commons after 10:30 BST and follows Wednesday's Spending Review, in which £11.5bn of cuts to Whitehall departments were announced.

Electricity price

The focus of the infrastructure spending is expected to be on energy.

The nuclear sector has long complained of a lack of government backing for new power stations - in particular agreeing a price for the electricity they will produce - so the government will try to show that commitment by promising money for the industry.

There will also be tax incentives for shale gas projects, with a report being published on Wednesday showing that the UK's reserves are much greater than previously thought.

The transport plans are expected to focus more on roads than railways.

One scheme thought to have been under consideration is for improvements on the A14, which runs from Catthorpe, in Leicestershire, to Felixstowe, in Suffolk.

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Mr Alexander's announcement is also expected to include plans to build schools and for investment in scientific research.

The first £50bn will be committed to infrastructure projects starting in 2015-16 and the rest for 2016-20.

Treasury sources said "a lot of building will start this side of the [2015] election".

Ms Osborne told BBC Breakfast that "you cannot just build a road in a week" but new homes, schools and roads were already being built and the coalition had a "long-term plan" rather than the "stop-start" approach of previous governments.

"We have got a long-term plan as a country to up our national game and make sure Britain is competing with the likes of China and India," he said. "We are doing all the things a country needs to do if it serious in winning the global race."

The chancellor said the government had made a "conscious" choice to limit public sector pay and welfare in the Spending Review so that it could prioritise long-term capital investment.

On energy, he said shale gas was "environmentally safe" and could provide "cheap energy" for many years to come - but that projects - criticised by environmental campaigners - would need to get the appropriate planning approvals.

Real-terms fall

But shadow chancellor Ed Balls said the "problem" was that "none of it starts for four years".

"They should do an immediate boost for housing and transport this year and next," he told ITV's Daybreak.

"George Osborne talks about capital spending but he's not actually acting.

"I don't think the public buy into this at all - I think people see their living standards falling, tax cuts for millionaires, the economy flatlining, unemployment high. The plan has completely failed."

The £50bn for 2015-16 represents a real-terms fall of 1.7% from the infrastructure budget for 2014-15.

But the coalition says the figure is still higher than the one Labour was planning when it was ousted from power in 2010.

The infrastructure announcements come the day after the Spending Review when a lack of consistent economic growth led ministers to make further cuts of £11.5bn in spending plans for the year from April 2015.

In the review, the chancellor said the economy was "out of intensive care" and announced several measures aimed at saving money, including:

Millions of public sector workers learning they face losing automatic annual pay increases
British pensioners living in six warmer EU countries will no longer get a winter fuel allowance
A cap on total welfare spending and axing winter fuel payments for expatriate pensioners in hot countries
Most unemployed having to visit a JobCentre every week instead of fortnightly
Total annual spending on welfare, including housing benefit, disability benefit, tax credits and pensioner benefits - but excluding the state pension - will be capped for the first time, from April 2015
Local government will take the biggest hit, with cuts at the Department for Communities and Local Government of 10%
The Home Office must save 6% from its budget, but the police budget will be cut by a lower 4.9% and counter-terror policing will be spared
The culture department escapes the worst of the cuts with expected savings of 7%
Science and research funding will remain flat
The NHS, schools in England and foreign aid will continue to be protected from budget cuts
The security services were the biggest winners, with a 3.4% boost to funding and Mr Osborne praising their "heroic" efforts to "protect us and our way of life"

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