Autumn Statement: Chancellor can invest £31bn extra by 2020 and end day-to-day deficit - think-tank

The Chancellor can replace his predecessor's target to bring the public finances into surplus in a way that allows £31bn extra investment in infrastructure this Parliament by committing to only bring day-to-day spending into surplus, a think-tank has said.

The Resolution Foundation has highlighted the opportunity for Philip Hammond to restore public sector net investment to levels last seen in the late 1970s and early 1980s, 2.2% of GDP, whilst still tackling the deficit in current spending. This would mean a £7bn or 17% increase in infrastructure spending to £41bn in 2020/21 alone, in a year when the Government expects to spend £4.8bn on HS2. It argued that this could be achieved without debt increasing relative to GDP, which would break the Treasury supplementary debt rule.

The intervention ahead of next month's Spending Review comes after Hammond told the Conservative party conference that the country's public infrastructure "languishes near the bottom of the developed-countries' league table after decades of under-investment... we need to close that gap with careful, targeted public investment in high-value infrastructure". Public sector net investment averaged 1.3% of GDP between 1985 to 2008, compared to an average of 4.9% between the mid-1950s and mid-1970s.