The infrastructure package is to be funded by聽welfare cuts, a reduction in overseas aid and a squeeze on departmental spending.
Other measures include a further one percentage point cut in the main rate of corporation tax from April 2014, to 21% and a temporary increase in the additional investment allowance from 拢25,000 to 拢250,000 for two years to support small and medium-sized businesses.
Unsurprisingly, the chancellor's statement was broadly welcomed by the construction industry.
The Civil Engineering Contractors Association (CECA) said that today鈥檚 autumn statement demonstrated that the government was listening to the needs of the infrastructure sector.
In advance of today鈥檚 statement CECA had worked with other industry bodies to press the case for immediate action to unlock activity in the sector. Based on analysis of figures published today, CECA believes that around 拢775m of work will be released in 2013/14 as a result of the chancellor鈥檚 actions. More than 拢1bn further additional work is due to follow the year after.
CECA director of external affairs Alasdair Reisner said: 鈥淐ECA has long argued that there is a pressing need for the government to take action to unlock new work in the infrastructure sector to achieve growth in the economy.
鈥淭oday鈥檚 autumn statement show that the government has listened. A combination of new projects and investment in repair and maintenance work offers the potential of additional work worth 拢775m for CECA members in 2013/14.
鈥淚nvestment in the infrastructure sector offers the best rate of return, but for larger infrastructure projects it can take time for these benefits to be realised, particularly due to the planning system. It is thus vital that government and industry work together to identify ways of unlocking work in the sector that will show an immediate benefit.鈥�
Mr Reisner continued: 鈥淏y announcing new work in the fiscal year, the chancellor has recognised the need to stimulate infrastructure activity in the short as well as the long term, as the best means of returning UK plc to economic health.
鈥淐learly we will need to be sure that this is genuinely new money, rather than recycling of funds that would otherwise have been spent on infrastructure elsewhere. But on the face of it, this appears to have been a good autumn statement for the industry.鈥�
Jonathan Hook, construction leader at consultant PwC, commented: "All in all, this statement appears to be positive for the construction sector.鈥�
Institution of Civil Engineers (ICE) director general Nick Baveystock said: 鈥淐learly government has heeded the advice of many across the industry to increase capital expenditure on infrastructure and get 鈥榮hovel ready鈥� road schemes moving 鈥� demonstrating to investors that the National Infrastructure Plan is leading to visible activity. The danger however, as with the 拢5bn capital boost announced this time last year, is that this will fail to materialise and breed further scepticism. The Highways Agency鈥檚 will have a crucial role to play here, accelerating the delivery of the schemes while still ensuring they deliver value for money.鈥�
CBI director-general John Cridland said: 鈥淭he CBI has been crying out for real action on infrastructure, investment and exports. 拢5bn on near-term infrastructure, like the tube to Battersea, half a billion a year tax relief for small firms, and 拢1.5bn extra export support should boost investment and create jobs.
鈥淭he government now has everything to prove by delivering. Businesses need to see the chancellor鈥檚 words translated into building sites on the ground. It is no surprise that after a difficult year the economic realities dictate that austerity and debt reduction will take longer.
鈥淭he chancellor has stuck to his guns on deficit reduction - avoiding deeper cuts or more borrowing in order to retain international credibility.鈥�
Jack Kelly, head of Deloitte鈥檚 contractors group, said: 鈥淚t appears that all the prerequisites for investment are being put in place. This will undoubtedly bring renewed confidence to an industry that has been struggling over the last year with falling order books and a number of administrations.
鈥淭he transparency announced should also assist an industry that is looking to retain its skilled workforce and whose biggest risk at present is the financial position of its supply chain. However, that investment has to start soon. The economic benefit of infrastructure investment is well documented, but that investment has not been forthcoming. It is needed now. Too many companies have failed because they have made pricing and employment decisions based on the belief that growth will return in a constantly moving fourth quarter.鈥�
Not everyone was totally enthusiastic though.
Richard Threlfall, UK head of infrastructure, building and construction at KPMG, said that there was聽鈥渓ittle to draw from the autumn statement that will give much comfort to the UK鈥檚 beleaguered construction industry".
He said: 鈥溌�1bn extra for 100 new schools and 拢1bn extra for roads are both welcome, but overall it is a drop in the ocean that can鈥檛 outweigh the economic drag. 70% of our infrastructure investment is from the private sector. More valuable than the 拢5bn of public investment would be incentives to the private sector to invest, such as the reintroduction of tax relief for infrastructure investment.鈥� 聽
Scottish Building Federation chief executive Michael Levack said: 鈥淥f course, the redirection of additional public funds towards capital investment is hugely welcome, particularly at a time when the construction industry continues to suffer reduced output and weak confidence. But the release of these funds places an even greater onus on policy-makers to implement urgent reforms to our constipated public procurement system so this money can put more shovels in the ground as soon as possible. In addition, the chancellor could have given a much greater boost to smaller building companies in particular if he鈥檇 cut VAT on building repairs and improvements as the industry has long campaigned for him to do. From that point of view, today鈥檚 autumn statement is another missed opportunity for more radical action to get the building industry back on its feet.鈥�
Steve Murphy, general secretary of construction union Ucatt, said: 鈥淭he promised investment in construction is to be welcomed but it in no way replaces the money government cuts have removed from the industry, policies which have forced construction into recession and damaged the entire economy. For example the investment in new schools is totally dwarfed by the cuts made to the Building Schools for the Future programme.鈥�
Mr Murphy said: 鈥淭here will be a significant delay between today鈥檚 promise of new investment and work actually starting on sites. Major infrastructure projects take a long time to organise, much of the new investment promised last year still has not resulted in any new work being undertaken.鈥�
He added: 鈥淕iven the short turnaround time in beginning house building and the desperate need for new homes due to the growing homelessness crisis, it is deeply disappointing that the chancellor has failed to provide significant investment into new social house building. This would be the most effective way of kick-starting the construction industry and getting skilled workers back into employment.鈥�
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