Spending boost for infrastructure projects

The chancellor is planning to throw a £5bn switch in his autumn statement - spending £5bn more of public funds on building roads, power stations and better broadband connections but paying for it by cutting £5bn more from day to day spending.

Tax credits look set to be cut again.

It's the latest part of George Osborne's efforts to prove that he can stimulate economic growth without spending any more money.

What's being labelled a new National Infrastructure Plan also aims to encourage large British pension funds to use £20bn of their savers' money to invest in infrastructure projects.

Among the 40 being prioritised are the TransPennine express line between Leeds and Manchester, the Metro system in Tyne and Wear as well as improvements to the M25, M56 and M3.

The idea of a £5bn boost to infrastructure spending first came from Liberal Democrat ministers.

When I reported it in September it was widely rubbished. The chancellor rejected the idea of an economic stimulus paid for by extra capital spending and borrowing.

What won George Osborne round was the idea of a switch from current to capital spending since it makes it easier for him to meet his target for reducing the deficit, or so-called "fiscal mandate", which, happily for him, focuses on current not capital spending.