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Chancellor to raid pensions, Whitehall to revamp UK broadband

£30bn pledge backed by China's deep pockets

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The Chancellor of the Exchequer is expected to deliver a gloomy autumn statement to MPs tomorrow when he will unveil the Treasury's gambit to boost the economy by pumping £30bn into the UK's ageing infrastructure - which includes more cash for broadband.

To do that, cuts of around £5bn are planned for Whitehall and George Osborne will also propose diverting about £20bn from the pension pot. The Chancellor will additionally approve a further £5bn of infrastructure projects for the next Parliament in 2015. But that's not all - China has set its sights on Britain's infrastructure, too.

According to the Financial Times, the People's Republic's $410bn (£265bn) sovereign wealth fund - China Investment Corporation (CIC) - plans to invest in Blighty's National Infrastructure Programme (NIP).

"Infrastructure projects normally involve an investor, developer, operator and contractor. Chinese involvement has traditionally been in the fourth. Now we also see a need to get involved in the other three," wrote CIC chief executive Lou Jiwei in the FT this morning.

"Local knowledge is essential. Foreign investors without this expertise cannot lead a project. Local co-investors and operators can fill this gap. Governments should encourage domestic players to take the lead in infrastructure projects, and attract foreign investment."

He described such an investment in the UK's infrastructure upgrade plans as offering "the chance of a 'win-win' solution for all". It's unclear how much of the £30bn to be set aside by the Chancellor will be peeled off specifically to help bolster investment in the country's broadband networks.

So far, £530m has been allocated by the government to help reach the final one-third of homes and businesses (around 9 million premises) throughout the UK in areas where BT could not find a compelling business case to invest in upgrading broadband connections.

Culture secretary Jeremy Hunt has always been clear that that lump of cash wouldn't be enough funding to cover all the rural areas still crying out for broadband coverage in Blighty. His department previously said that it was seeking a further £300m from government in order to reach remote areas of England, Scotland, Northern Ireland and Wales. But the extra £300m needed to make Hunt's plans a reality won't happen in this Parliament.

The Department for Culture, Media and Sport told The Register in August that that money won't be available until "2017 as part of the TV licence fee settlement".

Hunting high and low for superfast broadband cash

Hunt has recently been ridiculed by some ISP players after stating that the UK would have the fastest broadband network in Europe by 2015. He's hoping that 90 per cent of businesses and homes in each local authority in the UK can expect to have access to a "superfast" broadband network by 2015. The remaining 10 per cent should, at minimum, see broadband connection speeds of 2Mbit/s.

As we've noted previously, such a goal remains a huge challenge given that the funds need to be matched by the private sector and money from local councils and the Scottish gov, all of which – like central government – are feeling the pinch from cutbacks to other services.

Perhaps, this is why Osborne is set to announce that more cash is to be plonked into the broadband pot. The NIP will reportedly lead to investment in Britain's roads, railways, classrooms and broadband.

Separately, during his autumn statement tomorrow, the chancellor will announce credit easing schemes for small and medium-sized business. Up to £40bn in loans will be released under that plan, with the government underwriting banks' borrowing. That move, it is hoped, will help banks pass on cheaper loans to companies that turn over £50m or less.

El Reg will bring you full coverage of Osborne's autumn statement tomorrow. ®

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