CBI 'disappointed' by extra £4bn capital spending cut

Hundreds of infrastructure projects for new roads, bridges, business parks and hospitals are expected to be scrapped, despite claims by the government that it would protect capital spending. The chancellor pledged in his budget to maintain the trajectory of Labour cuts in capital spending and protect what he described as a vital area of spending from further reductions. But this has been undermined by plans for an additional £4bn of cuts over the next two years on top of those outlined by the previous Labour administration. Spending on building and infrastructure projects, many of them to support private sector businesses, will fall faster than expected after the chancellor announced £6.2bn of emergency cuts three weeks ago, with £2bn of the total from capital expenditure projects. The CBI said the emergency cuts meant the government was starting from a lower base in 2010 and the £2bn cut would be repeated next year. It said the move was disappointing and called on George Osborne to give capital spending a higher profile in the second half of the parliament. It said: "Capital investment is crucial to driving the economy forward and the government needs to make sure we get back to the long-run average of 2.25% of national income as soon as possible." In his budget speech Osborne said: "I think an error was made in the early 1990s when the then government cut capital spending too much – perhaps because it is easier to stop new things being built than to cut the budgets of existing programmes. We have faced many tough choices about the areas in which we should make additional savings, but I have decided that capital spending should not be one of them. There will be no further reductions in capital spending totals in this budget." The Treasury said the projects culled under the emergency cuts, many of them already given the go-ahead by Labour ministers, represented poor value for money. It said there would be no further cuts other than those announced in the budget. But critics of the cuts said the cash should be redirected into other schemes that would benefit local communities and businesses.