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The Treasury Department has given its clearest signal yet that it will change voluntary debt rules to borrow billions of dollars to fund new infrastructure projects.
Darren Jones, the Chancellor of the Exchequer, said independent checks on spending on major construction works would be introduced to help the government borrow money for investment “more efficiently”.
He insisted the spending safeguards were aimed at avoiding a repeat of the financial turmoil that followed the 2022 mini-budget under former chancellor Liz Truss.
The new watchdog will oversee a 10-year strategy for the pipeline of major projects in areas such as buildings, roads and rail.
What the government is calling infrastructure spending “guardrails” will be part of a bid to encourage the private sector to invest in British projects.
Under the plan, “expert-led checks and balances” would determine the quality of government borrowing for investment.
Currently, the amount a government can borrow for investment is limited by the amount of debt.
There is a voluntary rule that the total amount of debt owed by the government must be reduced within five years.
Many rich countries have similar rules to manage government finances and maintain confidence with financial markets and taxpayers.
But the Treasury has effectively agreed to ease its targets to borrow billions more to invest in a range of major projects.
Ahead of the Budget on October 30, Mr Jones said guardrails on spending would allow the government to borrow money for investment “more efficiently going forward”.
He said these guardrails stand in contrast to the Truss administration’s “debt for unfunded policies.”
During his brief spell as chancellor in 2022, Mr Truss used a mini-budget to unveil £45bn of unfunded tax cuts to boost economic growth.
“We need expert, institutional and independent guardrails to ensure everyone has confidence in how the government is spending their tax dollars,” Jones said.
“What I’m seeing today is that we’re putting them in place for capital investment and infrastructure development.”
The changes include a series of spending reviews and a coordinated 10-year strategy for the pipeline of major projects, as well as a new National Infrastructure and Services Transformation Agency to oversee long-term budgets for investment in buildings, roads and more. . And rail.
The National Audit Office and the new Value for Money Office will also carry out ongoing assessments of “mega projects” such as major rail lines.
The government said the measure would “depoliticize” infrastructure decisions and provide “independent checks and balances” on the government, similar to the Office for Budget Responsibility.
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Treasury Secretary Darren Jones
In the government’s view, the system provides independent quality control over spending on major projects, which have been plagued by delays and overspending and have proven to be more costly in the UK than in other major economies. It is.
Ministers argue that current debt rules reduce the quality of Britain’s public services by restricting some needed investment, while also allowing them to spend on failed projects.
One minister told the BBC: “When we invest in a project, we make sure it delivers real value for money, provides a return on investment and contributes to the local community.
“The Conservatives were wasting billions of pounds of taxpayers’ money on ministerial pet projects that never materialized and trying to buy votes. The Budget will change that.”
The announcement comes as the government faces intense scrutiny over how it will spend money in its Budget at the end of October.
On Wednesday, several ministers wrote to the Prime Minister asking him to reconsider the spending review within the 11th hour. There are concerns that doing so will reduce the budgets of various ministries and agencies.
Those involved included Deputy Prime Minister Angela Ryder, Attorney General Shabana Mahmoud and Transport Secretary Louise Haig, according to reports.
Mr Jones’ comments come alongside the government’s introduction of an infrastructure investment “taskforce” – a group of private sector heads including HSBC, Lloyds and M&G – to advise the government on where to invest in infrastructure. It turns out.
Boosting growth in the UK economy is a top priority for the government, with Chancellor Rachel Reeves saying increased investment in infrastructure is a “crucial part” of achieving this.
On Monday, Prime Minister Keir Starmer hosted a major investment summit in a bid to attract billions of pounds to the UK from overseas investors.
He said at the summit he would call on regulators to prioritize economic growth by scrapping regulations that “depress investment”.
