By Claire West

The CBI is calling on the Chancellor to take urgent steps to galvanise infrastructure investment in this month’s spending round, warning that failure to act will put the fledgling recovery at risk.

The UK’s leading business group is warning that even less infrastructure could be built in the years ahead, if private investment is stifled by the lack of a project pipeline and government’s slow pace on taking big decisions - all this as previous spending cuts from 2010 continue to filter through. It is urging the Chancellor not to repeat the mistakes of the last spending round, and further increase infrastructure spending.

To bridge the investment gap, the CBI is calling for short-term action on improving roads; boosting house-building and getting a pipeline of major projects moving.

Underlining the importance of fiscal consolidation, the CBI’s submission to the Chancellor identifies areas where substantial savings could be made if the Government takes a much bolder approach to public service reform. They include reducing automatic pay rises across the public sector and integrating social care spending into the NHS budget.

John Cridland, CBI Director-General, said:

“With more than half of government spending ring-fenced and £11.5bn of cuts required, the Government has to walk a tightrope of making substantial savings, without harming fragile growth.

“The Chancellor must prioritise areas that could propel a fledgling recovery and infrastructure investment should be in pole position.

“If the Government doesn’t act now even less infrastructure could be built in the years ahead, as cuts from the last spending round continue to feed through and decisions on major projects remain up in the air.

“To bridge the gap, the Chancellor needs to press ahead with short-term action to improve roads and boost the supply of housing. He also needs to identify a pipeline of transformational projects and make sure their red ribbons are cut at the earliest opportunity.

“Meanwhile ring-fencing cannot be used as a convenient shield, protecting some departments from essential financial discipline and the Government must not flinch from bold public service reform.”