Spending Review: Energy and transport to get share of £100bn

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.

The transport plans focused mainly on roads and railways.

'Road decay'

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.

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.

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.

'Act now'

But shadow chancellor Ed Balls said most of the projects would not begin for four years.

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

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 lost power in 2010.

'Rarely delivered'

Green Party MP Caroline Lucas said spending was being directed towards "polluting high-carbon infrastructure" such as roads and shale gas instead of prioritising jobs in renewable energy and energy efficiency,

The British Chambers of Commerce welcomed the announcement but said it must quickly be translated into action.

"Infrastructure projects are too often promised and too rarely delivered in this country, and that cycle must be broken," director of policy Adam Marshall said.

"The Whitehall machine must be judged by the number of diggers on the ground, not strategies and press notices."

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