Plans to invest £100bn in Britain's energy plants, railways and roads will be announced today by Danny Alexander, chief secretary to the Treasury, following yesterday's spending review announcements.

It means that these sectors will receive the majority of investment triggered by government spending in the next five to seven years, with the emphasis on energy infrastructure to plug looming potential shortfalls in supply and ensure energy security for the nation.

Projects to be outlined include guidelines for shale gas exploration, including a new estimate from the British Geological Society of how much shale gas exists under the North West of England.

Yesterday's Spending Review announced that the government's capital budget is to fall by 1.7% in real terms to £50bn in 2015.

The government is therefore hoping that the announcement will stimulate private sector investment to make up the shortfall.

This will be encouraged by an extension of the Treasury's loan guarantee scheme. This underwrites private sector investments by two years, up to 2016.


The chancellor did not, as on previous occasions, disparage the cleantech sector in his speech yesterday. Instead, he outlined plans to increase investment in renewables, nuclear and shale gas, which, he said "would provide our country with the energy of the future at a price we can afford".

Energy secretary Ed Davey, whose department received cuts of 8% yesterday, will announce details of these plans today, including energy market reform, draft strike prices for wind power, more details about exploratory drilling for shale gas, and the result of negotiations with EDF about their planned plant at Hinkley C in Somerset.

This plant is expected to cost around £14bn and the Treasury has agreed to guarantee some of the cost, reducing the impacts on EDF's balance sheet and allowing a low strike price for the electricity generated. This is despite a Coalition commitment not to subsidise nuclear power.

George Osborne said yesterday that shale gas was "environmentally safe" and could be a "real boon" for the UK economy. He admitted that specific projects would need appropriate planning and environmental approvals, but said that it could provide cheap energy for many years.

Cuadrilla, the company behind exploration in Lancashire, issued a statement saying that it needs to drill more wells to know exactly how much there is, but "we're confident we can get shale gas".


Local councils will likely suffer the most from the cuts announced yesterday. The spending review announced cuts to most government departments' budgets, including a total of 36% from that of the Department for Communities and Local Government.

Nevertheless, the chancellor promised a programme to build affordable homes worth £3bn.

Chris Murphy, the deputy chief executive of the Chartered Institution of Wastes Management (CIWM), warned that: “For local authorities, cuts in the region of 10% and the extension of the council tax cap could seriously impact on their ability to maintain current collection, recycling and local environmental quality services, let alone improve them".


Defra's budget is being cut by 10%, following what had been already the steepest of departmental cuts, prompting concerns that spending on agriculture, waste, water and biodiversity projects will be harmed.

Spending on flood defences is ring fenced.

The Environmental Services Association (ESA)’s director of policy, Matthew Farrow, said: “Defra ministers will now need to make some difficult choices in allocating the reduced spend, but it is vital that funding for tackling waste crime is protected.

“At a time when the Environment Agency is still identifying new illegal waste sites more quickly than it can shut down existing ones, any let up on the criminal behaviour which both blights communities and undermines legitimate business must be avoided."

Chris Murphy added: “We knew that this Spending Review would herald more tough cuts and once again, but it is disappointing to see that the two key departments of critical importance to the waste sector are once again among the hardest hit.

“CIWM has already voiced unease about Defra’s ability to deliver within its current resources, and today’s outcome deepens our concern."

Research and development

Funding for science and research will remain at the same level, £4.6bn per year, as it has since 2011. Capital expenditure for laboratory infrastructure will, however, almost double to £1.2bn.

"Scientific discovery is first and foremost an expression of the relentless human search to know more about our world, but it's also an enormous strength for a modern economy," Osborne said.

Specifically highlighted research and development projects include the Sabre air-breathing jet-cum-rocket engine and a new supercomputer for the Met Office that will benefit research into climate change.

Public science spending in Britain currently runs at about 0.65% of GDP, compared with an average of 0.8% for the G8 nations.


The Department for Transport's capital budget for 2015/16 will rise to £9.5bn in support of the "largest programme of investment in our roads for half a century".

Osborne made the announcement at the same time as Patrick McLoughlin, the transport minister, admitted in Parliament that the cost of its HS2 high-speed rail link has increased by nearly £10bn (24%) to £42.6bn.

This has raised questions from the CBI and others about whether it remains a worthwhile investment.

Mr McLoughlin said building HS2 would "create and support" at least 100,000 jobs.

The first £50bn investment will be committed to infrastructure projects starting in 2015-16 and the rest for 2016-20.

Most infrastructure spending to be announced today, will, however, concentrate on roads.

Osborne said that new homes, schools and roads were already being built and the coalition had 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".

The shadow chancellor, Ed Balls, noted that none of the announced projects would start for four years, and called for immediate spending to boost the economy. "George Osborne talks about capital spending but he's not actually acting. I don't think the public buy into this at all."

John Cridland, CBI director-general, agreed: “Infrastructure is rightly singled out as the most effective engine for growth, as we urged. While the government talks a good game on infrastructure we’ve seen too little delivery on the ground so far."

Resource Efficiency

Conservative MPs and peers, together with climate change minister, Greg Barker, are also today launching a new strategy for increasing resource efficiency.

The 2020 Productivity and Efficiency Commission will be launched this morning to tackle what Defra calculates as the £23bn of materials being wasted every year.

The event is being hosted by the manufacturers' organisation EEF, which says that policy needs to take more account of the threats posed by resource scarcity and volatile prices for materials.

"There is a growing body of evidence that suggests we can vastly improve the competitiveness of UK industry if we adopt new ways in using our resources," he said.

Green Alliance, a Parliamentary think tank, yesterday said that the low-carbon projects outlined by George Osborne could deliver a 0.7% boost to GDP in 2015, providing that they are delivered.

Story: David Thorpe, News Editor