Osborne to announce £5bn switch to capital spending

Chancellor George Osborne is set to announce a £5bn switch from current to capital spending in tomorrow’s autumn statement.

Reports suggest Osborne may cut tax credits in order to free up more public money for public construction projects.

The £5bn boost will be injected over the next three years.

Osborne will unveil nearly 500 priority public sector projects tomorrow, thought to include the TransPennine express line between Leeds and Manchester, the Metro system in Tyne and Wear and improvements to the M25, M56 and M3.

Some of the £5bn extra capital investment will also go to a £600m schools programme to fund an extra 40,000 places by 2014.

The Chancellor is also set to announce plans to encourage British pensions funds to invest a further £20bn in infrastructure plans.

The National Association of Pension Funds (NAPF) and the Pension Protection Fund (PPF) are among those signed-up to provide billions of pounds of investment in the industry.

Joanne Segars, chief executive of the NAPF, said: “Infrastructure is a good fit with the needs of pension funds because projects like ports and power stations can offer a reliable return over a long timeframe.

“But at the moment many pension funds struggle with the mechanics of investing in infrastructure. They need a simpler financial vehicle that helps them to get on board with bricks and mortar.”

Meanwhile, the Financial Times reports today that the China Investment Corporation is also set to invest in the UK’s infrastructure following encouragement from the UK government.