Sajid Javidwill launch what he is promising will be a new era of investment in the UK’s neglected regions with a post-electionBudgetannounced for 15 March.
New looser spending rules – to exploit rock-bottominterest rates– are expected to allow a £ bn boost for roads, rail, broadband and other infrastructure over the next five years.
But Mr Javid is expected to go further to direct that investment to areas of the north and midlandsthat voted Conservative at the election for the first time, by ripping up a longstanding barrier.
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Officials are drawing up new guidance to reflect that – with the Treasury able to borrow at 0.8 per cent and inflation at 1.5 per cent – it is effectively being paid to borrow, at a negative real-terms rate.
Mr Javid said recently: “In the past, the Treasury or government models have understandably looked for the highest return.
“And a lot of that pushed you towards London and the southeast – the number of people living there, the amount of economic activity and so forth.”
The chancellor said he would no longer need to be “looking for those high-level returns”, adding: “You can look throughout the country, and we can make many more investments.”
However, an extra £ 161 bn for infrastructure would fall far short of the £ 400 bn whichLaborpromised as essential to rebuild the country battered foundations.
And the Budget is likely to deliver less welcome news on day-to-day spending, after theConservativeswere accused of misleading voters in a timid election manifesto.
The respected (Institute for Fiscal Studies(IFS) highlighted how Tory plans would “bake in” austerity by leaving spending on public services, other than the NHS , a startling (per cent lower in******************************************** in (**************************************************************************. ********
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The Conservative manifesto said new day-to-day spending would amount to only £ 3bn by the end of the next parliament – and contained no plan for crisis-hit social care.
John McDonnell, Labor’s shadow chancellor, said: “After a decade of wrecking the economy, we can have no confidence in a Tory government delivering the scale of investment needed for renewal especially with a no-deal Brexit still on the table. ”
Mr Javid, said: “People across the country have told us that they want change. We’ve listened and will now deliver.
“With this Budget, we will unleash Britain’s potential – uniting our great country, opening a new chapter for our economy and ushering in a decade of renewal.”
The new rules will require the day-to-day budget to be balanced over three years, but allow more borrowing for infrastructure provided it does not exceed 3 per cent of GDP over the forecast period.
However, a “debt interest rule” would require the government to reassess its borrowing plans if interest rates rise and take the cost of debt interest above 6 per cent of tax revenue.
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