Hundreds Of Billions To Boost British Economy

By Poppy Trowbridge, Business and Economics Correspondent

A £100bn package aimed at kick-starting economic growth will be unveiled later, with roads, railways, construction and energy all set for major cash boosts.

The Government will promise to pour money into extra infrastructure spending by 2020, just 24 hours after confirming details of another £11.5bn in Whitehall cuts.

Chief Secretary to the Treasury Danny Alexander will outline the plans, which will include cash for new roads, train services, science facilities and nuclear power-stations.

Tax breaks and fast-tracked permits for shale gas exploration will also be offered, just as new data suggests Britain has higher reserves of the energy source.

Exploiting the natural resource is controversial because critics say the process can cause earthquakes, pollute water supplies, blight the countryside and hit house prices.

But ministers believe it could boost tax revenues, create jobs, reduce energy imports and cut household bills.

Tax breaks and fast-tracked permits for fracking will be offered

Mr Alexander is expected to tell MPs the Treasury will start consulting on the tax break and publish detailed planning guidance with the next three weeks.

Protection will be offered to communities affected, with each receiving at least £100,000 in benefits for each well and no less than 1% of overall revenues.

The investment package is due to begin in 2015, with £50bn spent on capital projects that year, but critics have questioned when construction will actually start.

And there is already embarrassment after the Government was forced to admit the cost of one of the most high-profile projects has soared.

The HS2 high-speed rail line is now set to cost nearly £10bn more than was originally allocated, which will raise doubts about other forecasts.

About £3bn will be spent on affordable housing projects

Labour called the announcement a "con", claiming £50bn would mean a 1.7% cut in real terms and that 80% of major infrastructure projects had yet to begin.

Shadow chancellor Ed Balls said: "There is no point in boasting about infrastructure investment in five or seven years' time, we need action now."

He claimed that infrastructure investment in the first three months of 2013 is down by 50%.

Appearing on ITV's Daybreak, he added: "They should do an immediate boost for housing and transport this year and next. George Osborne talks about capital spending but he's not actually acting."

About £3bn of the money is earmarked for affordable housing. Mayor of London Boris Johnson will also receive around £9bn in extra finance over the coming years.

In his spending review on Wednesday, Chancellor George Osborne said: "From roads to railways, bridges to broadband, science to schools: it will amount to over £300bn pounds of capital spending guaranteed to the end of this decade."

The coalition has admitted HS2 is set to cost billions more than forecast

Nick Prior, head of government and infrastructure at Deloitte, told Sky News the high numbers being announced were "encouraging" but questioned the detail.

"If it is more than rhetoric, it could be quite powerful, it could really be a driver for the UK economy," he said.

"We wait to see if that's going to be incremental investment in infrastructure and real capital spend. Or is it just going to be a rehash of previous statements?"

CBI director general John Cridland added: "While the Government talks a good game on infrastructure, we've seen too little delivery on the ground so far.

"It is critical we see a real pipeline of projects announced, so investors know what schemes are going ahead, where and when."

The coalition's economic strategy has come under intense pressure as Britain's recovery from the financial crisis and recession continues to be sluggish.

Mr Osborne insists the country is now "moving out of intensive care and from rescue to recovery" but poor growth has forced him to extend drastic austerity measures beyond the next election.

His latest raft of cuts includes a new hit on public sector pay, a cap on welfare spending, forcing the jobless to wait a week before claiming benefits and stripping some ex-pats of the winter fuel allowance.

Government departments face further budget reductions of up to 10% in 2015/16, with only the NHS, schools, overseas aid fully ring-fenced.

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