THE TREASURY is drawing up plans to increase government borrowing to fund infrastructure, housing and business investment ahead of the October budget.
The proposals could provide more than £9 billion a year for investment by 2031 by using changes to the fiscal rules introduced by former chancellor Rachel Reeves.
The changes allow spending on infrastructure or equity investments in companies to be counted as assets against borrowing, giving ministers more room to invest while remaining within the fiscal rules, reported The Times.
Officials are examining whether the funding could be directed through public financial institutions including the British Business Bank, the National Wealth Fund and the National Housing Bank.
The money could also support regional mayors, help prevent high-growth British start-ups from moving to the US and contribute to the government's target of building 1.5 million homes by the end of the current parliament, reported The Times.
Andy Burnham said he wanted "flexibility" within the fiscal rules, while chancellor John Healey told The Times there was "scope for more and more rapid investment".
A Treasury source told the newspaper that Healey was considering a "range of options" before his first budget, but his "No 1 priority" remained maintaining fiscal discipline.
The Resolution Foundation said the approach could unlock an extra £9 billion a year for investment by 2031.
