Energy and roads get share of Â£100bn

27 June 2013 Last updated at 07:52 ET

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Danny Alexander: "We are putting long-term priorities before short-term political pressures"

Plans for a £100bn modernisation of the UK's infrastructure, including new homes, road repairs and improved flood protection, have been announced.

The package, of which £50bn will come in 2015-16, is also aimed at boosting new sources of energy like shale gas.

Treasury Minister Danny Alexander said the plans put "long-term priorities before short-term political pressures".

But Labour said projects must start now and capital investment in the engine of the economy was actually falling.

The announcement of the government's infrastructure plans came a day after Wednesday's Spending Review, in which £11.5bn of cuts to Whitehall departments were spelt out.

While the first £50bn is committed to infrastructure projects starting in 2015-16, the rest is for the period from 2016 to 2020.

The main funding commitments include:

£3bn to build 165,000 new affordable homes
£28bn for road improvements, including £10bn for essential maintenance
£10bn to clear a "backlog" of school building repairs
850 miles of railway to be electrified as part of £30bn rail investment
£250m for extended super-fast broadband to rural areas
£370m for flood defences
Agreement with industry to provide affordable insurance for flood-hit homes
£800m extra funding for Green Investment Bank
£150m for health research including into dementia
£100m for a new prison in Wales

"This is an ambitious plan to build an infrastructure that Britain can be proud of," Mr Alexander told MPs.

The road building programme was the largest for 40 years and the support for new homes the most substantial for more than two decades, he said.

As part of efforts to boost home building, government-owned land will be sold to the private sector and together with sales of other government assets, including the Student Loans book, would raise £15bn.

There will be new support to help the building of new nuclear plants, including Hinkley Point in Somerset, a guaranteed price for offshore wind energy and tax incentives brought in for shale gas projects.

His speech came as a report was being published showing that the UK's shale gas reserves were greater than previously thought.

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The transport plans focused mainly on roads and railways.

Mr Alexander said £10bn would be spent on dealing with the UK's "decaying" road network, with 21,000 miles of roads to be resurfaced and new lanes to be added to the busiest stretches of motorways.

Among the most significant projects, the £1.5bn upgrading of the A14 between Huntingdon and Cambridge will be brought forward by two years to 2016.

Mr Alexander said the spending on roads was equivalent to the cost of filling 19m potholes.

On rail, he restated plans to electrify large parts of the network and increased the budget for the proposed HS2 line connecting London and seven of the largest ten UK cities, to more than £42bn.

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Osborne: "We've got a long-term plan now as a country to up our national game"

He also confirmed that £2m feasibility funding would be provided for London's proposed Crossrail 2 project, but said Mayor Boris Johnson's challenge was to work out how the private sector could meet at least half the cost of the scheme.

He also said the basis of an agreement had been reached with the insurance industry for it to pay for a new scheme to help 500,000 homeowners in areas prone to serious flooding to get cover at reasonable prices.

Earlier, Mr Osborne told BBC Breakfast that "you cannot just build a road in a week" but new homes, schools and roads were already finished and the coalition had a "long-term plan" rather than the "stop-start" approach of previous governments.

"We have got a long-term plan as a country to up our national game and make sure Britain is competing with the likes of China and India," he said. "We are doing all the things a country needs to do if it serious in winning the global race."

On energy, he said shale gas was "environmentally safe" and could provide "cheap energy" for many years to come - but that projects - criticised by environmental campaigners - would need to get the appropriate planning approvals.

Real-terms fall

But shadow chancellor Ed Balls said the "problem" was that "none of it starts for four years".

"They should do an immediate boost for housing and transport this year and next," he told ITV's Daybreak.

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Ed Balls: "The international monetary fund says a £10bn boost is needed now"

"George Osborne talks about capital spending but he's not actually acting.

"I don't think the public buy into this at all - I think people see their living standards falling, tax cuts for millionaires, the economy flatlining, unemployment high. The plan has completely failed."

The £50bn for 2015-16 represents a real-terms fall of 1.7% from the infrastructure budget for 2014-15.

But the coalition says the figure is still higher than the one Labour was planning when it was ousted from power in 2010.

In Wednesday's Spending Review, the chancellor said the economy was "out of intensive care" and announced several measures aimed at saving money, including:

Millions of public sector workers learning they face losing automatic annual pay increases
British pensioners living in six warmer EU countries will no longer get a winter fuel allowance
A cap on total welfare spending and axing winter fuel payments for expatriate pensioners in hot countries
Most unemployed having to visit a JobCentre every week instead of fortnightly
Total annual spending on welfare, including housing benefit, disability benefit, tax credits and pensioner benefits - but excluding the state pension - will be capped for the first time, from April 2015
Local government will take the biggest hit, with cuts at the Department for Communities and Local Government of 10%
The Home Office must save 6% from its budget, but the police budget will be cut by a lower 4.9% and counter-terror policing will be spared
The culture department escapes the worst of the cuts with expected savings of 7%
Science and research funding will remain flat
The NHS, schools in England and foreign aid will continue to be protected from budget cuts
The security services were the biggest winners, with a 3.4% boost to funding and Mr Osborne praising their "heroic" efforts to "protect us and our way of life"

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