Budget: Rishi Sunak to promise raise in public sector infrastructure investment to highest level in decades

Chancellor will set out plans for spending totalling hundreds of billions of pounds on roads, railways, housing, broadband and research

Chancellor Rishi Sunak is to promise to raise public sector infrastructure investment to its highest level in decades during Wednesday’s Budget.

Mr Sunak is set to announce plans for spending on roads, railways, housing, broadband and research running into “hundreds of billions of pounds” – though it was unclear what time period this spending would cover.

Treasury sources said the spending package would mean net investment rising to three times the average seen over the past 40 years by the end of this parliament in 2024, reaching a peak not seen since 1955, taking inflation into account.

But Labour dismissed it as “the same old”, saying that the chancellor was doing no more than promising to rebuild what Conservative-led governments had “destroyed” during a decade of austerity.

The dramatic spending splurge is likely to force the chancellor to abandon the fiscal rule – inherited from predecessor Sajid Javid just 27 days ago – which caps public sector net investment at 3 per cent of GDP.

Public sector net investment (PSNI) exceeded 3 per cent of national income in every year between 1951 and 1977-78 but has not exceeded that level since, largely because of the transfer of so much state activity into the private sector.

With PSNI currently at around 2 per cent of national income, this rule gives the government scope to bring investment up to a level not seen since the arrival of Margaret Thatcher in power, but would not allow a return of 1970s-level spending.

Mr Sunak will also launch a review of capital investment rules to allow the spending to be spread around the UK to places where it will support Boris Johnson’s priority of “levelling up” areas where economic growth has lagged behind the prosperous southeast.

Speaking on the eve of his Budget statement, Mr Sunak said: “This is a Budget for people right across the country – no region will be left behind.

“We have listened and will now deliver on our promise to level up the UK, ensuring everyone has the same chances and opportunities in life, wherever they live.

“By investing historic amounts in British innovation and world-class infrastructure, we will rebalance opportunities and lay the foundations for a decade of growth for everybody.”

But Labour’s shadow chancellor, John McDonnell, said: “It’s the same old. We’ve heard it all before. Exaggerated claims, then our country let down by a Conservative failure to deliver.

“The chancellor seems to have forgotten we have to dig ourselves out of the £192bn hole in our infrastructure spend created by his government. Boris Johnson has a track record of boastful claims followed by non-delivery and it looks like he is running true to form.

“A stronger chancellor would have had the Treasury prevent these exaggerated claims. Mr Sunak is asking us to congratulate him for partially rebuilding what the Conservatives have destroyed over the last 10 years.”

A 30-year national infrastructure strategy, setting out plans for £100bn of spending over the course of this parliament, had been due to be published alongside Wednesday’s Budget.

But it was revealed last week that it would be delayed, raising concerns that the Budget would feature bold promises on infrastructure but little in the way of detailed plans.

The long-awaited strategy comes in response to a 2018 report from the head of the National Infrastructure Commission, Sir John Armitt, which included proposals for nationwide full fibre broadband by 2033; half of the UK’s power to be provided by renewables by 2030; £43bn of long-term transport funding for regional cities; 100 per cent electric vehicle sales by 2030; and a national standard of flood resilience for all communities by 2050.

New investment in Wednesday’s Budget will follow last month’s announcement of government support for the HS2 rail link, a £5bn plan for bus services and cycling links, a £3.6bn towns fund, and the prime minister’s commitment to fund the Leeds to Manchester leg of Northern Powerhouse Rail.