Infrastructure pledge in George Osborne's autumn statement welcomed, but housing plans don't go far enough

Chancellor George Osborne promised £5bn of extra capital investment in infrastructure as he delivered his autumn statement in the House of Commons yesterday.

Chancellor George Osborne: Image HM Treasury
Chancellor George Osborne: Image HM Treasury

Osborne told parliament he would pump £1bn into upgrading roads, £1bn into school improvements and building 100 new schools and academies. He set a target of 120,000 new homes to be built and he also pledged £600m to beef up scientific research.

The Construction Industry Council, which includes the Landscape Institute, said the investment in infrastructure was likely to help landscape construction firms and suppliers.

Deputy chair Stan Hornagold told Horticulture Week: "Emphasis on infrastructure and capital spending is cautious but welcome and reform of private-finance initiative is long overdue: it has to deliver better value for money and be better for transport and schools funding."

However KPMG UK chief economist Andrew Smith said the impact of the infrastructure investment would be limited because Osborne was "hemmed in" by low growth and tight fiscal rules while "we are looking at a multiyear contraction in the economy to 2018", he told the BBC.

Royal Institute of British Architects welcomed the commitment to build 120,000 new homes but called the measures "a missed opportunity to tackle housing crisis and boost UK construction industry".

President Angela Brady said: "A healthy construction industry is vital if the UK is to recover from the economic decline of the past few years. We do not believe the autumn statement goes far enough to tackle this housing crisis.

"The commitment to fund 120,000 is significantly short of the mark; we need to be building 300,000 new homes a year to meet current demands and solve the housing shortage. Design quality is vital for creating sustainable communities and offering long-term value to taxpayers."

Federation of Small Businesses chairman John Walker welcomed cancellation of the 3p rise in fuel duty but wanted further details on the small business bank which would play a central role in opening up finance for small firms.

"We are pleased the Government has listened to our call for improvements in the transport infrastructure, particularly the road network. Poor state of roads costs around half of small businesses up to £5,000 a year due to congestion and poor maintenance."

CBI director-general John Cridland said: "We have been crying out for real action on infrastructure, investment and exports. The £5bn on near-term infrastructure, half a billion a year tax relief for small firms, and £1.5bn extra export support should boost investment.

"The Government now has everything to prove by delivering. Businesses need to see the chancellor’s words translated into building sites on the ground. It is no surprise that after a difficult year the economic realities dictate that austerity and debt reduction will take longer."

Key points

  • 3p-a-litre increase in fuel duty, planned for next January, is cancelled
  • Economic growth predicted to be -0.1% in 2012
  • Basic income tax threshold to be raised to £9,440
  • Threshold for 40% rate of income tax to rise by 1% in 2014 to £41,450
  • Extra £1bn to roads, including upgrading A1, A30, and M25
  • £1bn loan to extend London's Northern Line to Battersea
  • £1bn to improve good schools and build 100 new free schools and academies
  • £270m for further education colleges
  • £600m for scientific research
  • Annual infrastructure investment now £33bn
  • £1bn extra capital for Business Bank

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