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Tories rack up pressure on transport spending


PRESSURE ON transport budgets increased this week as the Conservatives unveiled their economic strategy.

Shadow Chancellor Oliver Letwin said on Monday that a Conservative government would freeze transport, environment and defence spending so more cash could be pumped into health and education.

His announcement comes amid fears that Chancellor Gordon Brown will cut transport spending in his Comprehensive Spending Review this summer when he sets budgets for the next three years.

Letwin unveiled his economic strategy in a speech to the centre right Bow Group. He said he would aim to 'reduce the share of national wealth spent by government by slashing back on bureaucracy and curbing the funds available for other state services'.

Letwin says that if the Conservatives were elected, the proportion of gross domestic product consumed by the public sector would fall over seven years from 42% to 40% - saving about £35bn a year on Labour's current plans.

Under Letwin's proposal, government spending would be divided into five components:

the cost of running government itself;

spending on the NHS and schools;

spending on pensions and other benefits paid to pensioners;

spending on benefits paid to non-pensioners;

total spending on all remaining areas, including defence, transport and environment.

It is this last component that would have greatest effect on the construction industry.

Letwin says the total amount spent on transport, defence and the environment collectively will be frozen for the first two years of a Conservative government.

Thereafter, baseline spending on these departments will rise by 2% per year.

'Within this total, we expect to see faster growth in some areas, offset by reductions in wasteful, ineffective or unnecessary spending in other areas, ' said a Conservative party spokesman.

'This is the general underlying principle, but we won't be drawn at this stage on specific areas.'

Construction Products Association economist Allan Wilen said: 'I hope this doesn't indicate a return to a stop-start approach, which doesn't deliver good value for the government.

'We would also be concerned at the suggestion that much needed investment in road and rail is delayed.'

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