Chancellor Rachel Reeves said the government would prioritize and increase investment in major projects in this month’s budget.
In addition, she announced investments of almost £22 billion over 25 years in two major new carbon capture schemes.
She criticized plans she inherited from the previous government to cut investment as a share of the economy and said she would not repeat “those mistakes”.
But the Conservatives said it was thanks to them that funding for the carbon capture project was announced.
For weeks, Reeves has hinted that the German finance chancellor would change self-imposed borrowing rules to allow for a significant increase in investment in major projects, but now Ms Reeves has given her strongest indication yet that The level of national investment will increase significantly.
The Green Scheme are two new carbon capture and storage projects in Merseyside and Teesside.
The government says they will create and support thousands of jobs, attract private investment and help the UK meet its climate targets.
Up to £21.7 billion will be provided over 25 years to subsidize the three projects once they start capturing energy from hydrogen, natural gas and waste.
Oil and gas giants BP and Equinor will be among the companies providing private sector funding for the projects, she said, adding that other countries “want to receive such investment”.
But Doug Parr, policy director at Greenpeace UK, said more than £21bn was “a huge amount of money for a project to extend the life of Earth-heating oil and gas production”.
The prime minister said the previous government never signed such contracts because it did not prioritize capital investment, i.e. money for projects such as buildings, equipment and IT.
She directly criticized the UK capital budget being reduced from 2.5% to 1.6% of the size of the economy.
However, Conservative shadow energy minister Claire Coutinho said that “thanks to the Conservatives, we have already announced funding for these projects in spring 2023”.
She added that the announcement “does nothing to make up for the massive deindustrialization path that Ed Miliband’s costly net zero emissions and energy policies have set us on, with his zeal for steelmaking, refineries and jobs in the north” Had a devastating impact on the “sea”.
But Ms Reeves said the previous government “cut back investment at a time when we needed more investment in the economy”.
“I don’t make these mistakes,” she said.
Her words were the clearest confirmation of a shift in how major projects are spent in the budget and spending review, linked to efforts to attract significant private investment at an upcoming international investment summit.
She said the summit would be “a huge opportunity for us to showcase what the UK has to offer to some of our biggest investors”, including private equity, venture capitalists and sovereign wealth funds.
She also dismissed suggestions that the government’s budget rhetoric was spreading pessimism among consumers and businesses, saying there would be a “drumbeat” for major investment in the coming days.
