Alistair Darling evoked the spirit of John Maynard Keynes yesterday as he signalled a “reprioritising” of spending plans towards capital infrastructure, housing and energy.
The chancellor of the exchequer will call on departments to bring forward billions of pounds of capital expenditure to invigorate the economy ahead of an expected recession.
The government is limited in its ability to step up overall spending for the current three-year period, set at the last comprehensive spending review. But it can bring forward money from planned budgets in 2010-11 – after the next general election – creating potential difficulties for whoever is in government.
The challenge will be to accelerate the spending in such a short period, not least given the chill in private finance initiative markets upon which many such projects depend.
Darling, in a newspaper interview published yesterday, spoke approvingly of Keynes, the economist who urged the use of public money to finance job-creating capital projects in difficult times.
The rhetoric at the top of the government has been shifting towards this position for several days, with Gordon Brown promising last Thursday to continue high levels of investment. 'We are spending more to get the economy moving,' the prime minister said.