Capital spending funds have been spared in George Osborne's 'unavoidable' emergency Budget.
Describing it as the 'unavoidable budget', overall government spending will rise from £637bn in the current financial year to £711 bn by 2015/16.This means that unprotected departments face cuts of up to 25 per cent in the Spending Review set for Wednesday 20th October.
The Chancellor, having debated how much further capital spending could fall, spoke of the economy's need for new transport infrastructure, military equipment and appropriate facilities for quality public services.
The decision not to cut capital expenditure further was based on lessons learned from the Howe cuts of the 80s.
However, he warned of making careful choices about how capital spending is allocated.
Projects likely to deliver a measurable economic return will be favoured in October's Spending Review (SR).
There was a clear steer that more government held assets should be transferred to private ownership.
Mention was made of yesterday's news of the proposed sale of the high-speed rail link, air traffic control service NATS, the Student Loan Book and finally resolving the future of the Tote.
The Chancellor also announced the establishment of a Regional Growth Fund.
Lasting initially for two years, the fund will give priority to regional capital projects demonstrating the greatest impact on innovation and jobs.
The Chancellor also committed the government to funding four regional transport projects: the upgrade of the Tyne and Wear Metro, the extension of the Metrolink tram system in Manchester, the redevelopment of Birmingham New Street station; and rail links to Sheffield and between Liverpool and Leeds.
An announcement was made about the summer publication of a White Paper on rebalancing the regional economy and measures to encourage job-creation.
In the past decade he claimed that London and the South East created 10 jobs for every one job created in the Midlands and northern regions.
The Chancellor also recommitted the government to the Green Investment Bank bringing forward private investment in clean energy and green technologies.
Similarly he pledged to enhance digital infrastructure by encouraging private broadband investment in rural areas, using in part the underspend from the Digital Switchover programme.
