George Osborne is set to announce around £2.5bn in new capital investment in the Budget, financed through departmental spending cuts

Osborne

Source: PA

The prime minister’s spokesman said today that ministers have been told they will have to find an extra £2.5bn of spending cuts to fund capital investment projects included in the Budget.

The prime minister’s spokesman that all unprotected departmental resource budgets would be reduced by a further 1% a year over the next two years - 2013/14 and 2014/15.

“That will save cumulatively almost £2.5bn - that £2.5bn will help fund further investment in capital spending that will be announced in tomorrow Budget,”  the spokesman told a media briefing this morning.

It is expected that the new capital spending will be focused on housing and smaller infrastructure projects, including roads.