The Chancellor’s Spending Round announcement sees the Government increasing the funding available to South West Water to £40 million in 2015-16 to enable them to continue to reduce their customers’ bills by £50 per year increased and a reaffirmation of its commitment to flood defence investment – but Defra has seen its budget slashed by 10%.

Details of spending plans for the financial year 2015 to 2016 have been announced by the Chancellor, including an increase in capital spending by £3bn per year, have seen the Department of Environment Food and Rural Affairs budget cut by 9.6% - down from £1.7 billion in 2014-15 to £1.6 billion in 2015-16.

Chancellor of the Exchequer George Osborne announced that £11.5bn of savings would be found from government budgets in order to continue along Britain’s path to deficit reduction as he delivered his Spending Round speech today in the House of Commons.

The Chancellor said this would allow a further £3bn per year to be spent on capital from the year 2015 to 2016, boosting investment in infrastructure and supporting economic growth at the same time as ensuring a sustained reduction in the deficit.

The Chancellor also said that the government would deliver over £5 billion further efficiency savings in the year 2015 to 2016 through stopping wasteful expenditure, transforming transactional and corporate services such as HR administration and IT support, and reducing the running costs of government.

The Government said it is prioritising spending on long-term infrastructure projects and other programmes that will promote economic growth. The Spending Round sets out a long-term plan for capital investment to 2020 and beyond, and capital spending allocations for all departments for 2015-16. Details will be announced in Investing in Britain’s Future of how over £100 billion of infrastructure investment will be allocated over the next Parliament – including spend on flood defences.

The Spending Round document said the Government is committed to providing the necessary capital investment to strengthen flood defences and that public investment in existing flood protection and new schemes would support the insurance industry to maintain available and affordable flood cover for households.

The Department for Environment, Food and Rural Affairs (DEFRA) settlement includes support for flood defences, with resource spending maintained in cash terms. The Government also want more focus on greater efficiency through coordination across the Department’s Arm’s Length Bodies(includes the Environment Agency, Consumer Council for Water and Internal Drainage Boards) reducing fines payable to the EU for disallowance and prioritised spending on economically high-value areas.

Head of Infrastructure at WSP Duncan Symonds said the announcements of more capital investment and consideration of the case for Crossrail 2 was encouraging:

“Government appears to be recognising and addressing two fundamental issues that have long plagued this vital sector. One, that effective and efficient infrastructure is key to economic growth and the UK’s is below par, and two, that we can’t afford to lose specialist skills, confidence and momentum through long periods of inactivity between projects.

“However, we mustn’t forget that while the big red tape projects are important, the smaller less sexy projects, like flood defences and maintenance programmes are equally important and in some case can have more immediate impact on the economy, creating jobs and building asset value.”

Overall DEFRA will save £54 million in 2015-16 through better joint working between the Department’s delivery bodies under the Strategic Alignment programme, removing duplication in back office functions so that it is better able to meet customer needs.

The Government is also increasing the funding available to South West Water to £40 million in 2015-16 to enable them to continue to reduce their customers’ bills by £50 per year. Water bills in the South West are significantly higher than the national average – the Spending Round paper says the funding will ensure that household bills remain affordable and fair.

The Chancellor is also making a further £185 million of additional resource funding for the Technology Strategy Board to support innovation, including Catapult Centres John Cridland, CBI Director-General described the boost for the Technology Strategy Board - a crucial anchor for innovation - as particularly welcome. However, he added:

“Infrastructure is rightly singled out as the most effective engine for growth, as we urged. While the Government talks a good game on infrastructure we’ve seen too little delivery on the ground so far. It is critical we see a real pipeline of projects announced tomorrow, so investors know what schemes are going ahead, where and when."

Interestingly the chancellor also announced that the Government will strengthen trade and investment links with China -the Government will develop proposals with the private sector to establish business centres in the fastest growing cities as a base for small and medium-sized exporters, and will support small businesses to access the Chinese market through e-commerce.