Published on 26 Jun 2013

Capital spending repentance?

There will be a lot of noise on infrastructure spending today and in a Danny Alexander announcement tomorrow.

You could argue that with every year the Coalition tries to do penance for cutting capital spending too much in its 2010 Comprehensive Spending Review.

Coalition ministers insist that they were left no option as they were merely following Alistair Darling’s planned capital spending cuts, but some economists say there were any number of spending plans in local authorities and schools for instance that could have been activated if the coalition had revisited those numbers in 2010.

Don’t expect public repentance on this – you can read Nick Clegg on this subject here in an interview from last month.

One of the big infrastructure investments that gets talked about is nuclear energy but progress has been distinctly slow. I hear EDF in France is currently mulling over the numbers on Hinkley B.

I also hear that the government’s re-thinking how it welcomes Chinese investment into the nuclear industry here. Delegations from China left feeling snubbed in the recent past. There’s talk that BIS is regretting this and planning a warmer reception if it can get them interested again.

On a separate point, p 39, the final chart on this presentation by the IFS explains how the government is making headway on cutting departmental spending, but the Annual Managed Expenditure – welfare, debt repayments etc – is going up.

It suggests that the next spending review – after the 2015 election – will almost certainly start to eat into pensioner benefits whoever is elected – and it tells you why all 3 major parties are talking about a cap of some sort on aspects of the AME welfare spending.

The FT says that Local Enternprise Partnerships won’t get anything like the dreamed of boost that Michael Heseltine said they needed if British spending was to be truly de-centralised and follow the German model.

We will hear what number George Osborne has in mind to kick things off in 2015-16, but I hear Michael Heseltine has long since expected a low one. Lord Heseltine has been busy on a circuit of the country selling his ideas and has, I hear, been heard to say he thinks his only hope of getting his plans truly off the ground rest on Labour getting into power in 2015.

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