Details of initiative to be spelt out in next week’s Budget

Chancellor Rachel Reeves has confirmed she will change the government’s debt rules to free up billions for infrastructure spending.

The change will alter the way debt is measured and will allow the government to bankroll extra investment.

The measure is expected to allow for up to £50bn more borrowing to invest in big building projects such as roads, railways or hospitals.

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Source: HM Treasury/Flickr

The change in debt rules will be used to fund spending on infrastructure schemes, chancellor Rachel Reeves said

Details of the move will be spelt out in next Wednesday’s Budget, the chancellor added.

Reeves told the BBC that the Treasury would “be putting in guard rails” on investment spending by having the National Audit Office and the Office for Budget Responsibility, the government’s financial watchdog, “validating the investments we’re making to ensure we deliver that value-for-money”.

She added that the newly created National Infrastructure and Service Transformation Authority will outline what the money needs to be spent on while the Office for Value for Money will scrutinise spending.

As well as infrastructure work, the new rules are also expected to be a shot in the arm for plans to build more social housing.

Shelter’s head of policy Charlie Trew said: “Our modelling shows that building and managing 90,000 social rent homes would generate a total of £51.2bn for the economy over 30 years through job creation, increased construction activity, and savings which include lower housing benefits bill and reducing strain on the NHS. Not only this, but the Exchequer would get its initial investment back in just over a decade.”