Chancellor Alistair Darling has promised to continue spending at “historic levels” until 2012, and will maintain it at 1.25% of GDP thereafter.
In his Budget statement, Darling said capital spending was “essential” to help create jobs and deliver services.
“Capital spending is equally important to the future of our country,” said Darling.
“Over the last five years, this investment has transformed services with 61 major hospital schemes, 140 new schools and improved transport links, including the modernisation of the West Coast main line.
“It is essential to help create jobs, boost the recovery and deliver economic success in the long term.
“I intend that capital investment will continue at historically high levels to 2012, as we prepare for the Olympic games in Britain.
“After this, public sector net investment will be at 1 ¼ per cent of GDP by 2013-14, still twice as high as in 1997.
“Indeed, the efficiency savings we are making will help us direct more money to continue to support investment that everyone in our country depends on.
Darling added that £16bn of property and asset sales by 2012 will be ploughed straight back into capital investment.
“The Government has set itself a central goal of realising up to £16bn of property and other asset sales in the three years from 2011-12, with proceeds raised being used for new capital investment.”