Cambridge and other medium-sized cities across the UK are set to be brought up to speed with 'ultrafast' broadband rolled out in government investment of the nation's infrastructure.

The Chancellor George Osborne, in his Autumn Statement announced that 12 smaller cities; including Brighton and Hove, Coventry, Derby, Oxford, Portsmouth, Salford, York, Newport, Aberdeen, Perth and Derry-Londonderry were set to benefit from the internet expansion.

The investment in the fast broadband connection is part of a £5bn pot the government has set-aside for upgrading of major road links, extension of rail lines as well as bringing flood defence schemes to more cities.

Of the infrastructure investment, Osborne said: 'It is exactly what a government equipping Britain to compete in the modern global economy should be doing.'

Much of the fund has been financed by departmental cuts across Whitehall and Alan Downey, UK and Europe head of public sector at KPMG said: 'With the fragile state of the economy the Chancellor clearly wanted to spend more on capital programmes in an effort to stimulate economic growth and fund investment in infrastructure. The big question now is how government departments will respond? Will they just trim at the margins, or will they opt for more radical change?

Richard Abadie, PwC's global head of infrastructure, said: 'We welcome the additional £5bn allocated to infrastructure investment and the announcement of a loan to kick start the Battersea Northern Line extension. New investment contributes to economic growth and job creation.'

The Chancellor set out private finance 2 (PF2), the government's proposed alternative to the much-maligned private finance initiative (PFI), but Abadie is sceptical: 'The new PF2 model appears similar to the alleged "discredited" PFI model. Besides the change in name, the core of the model ie using private finance to finance construction and getting repaid over a long period of time, remains the same and will be welcomed by local and international contractors, investors and lenders.

'Some of the changes such as transparency are welcomed and overdue and nobody can argue against them. The increase in equity required for projects is a surprise as it will likely makes projects more expensive. Maybe the government feels that by buying up to half the equity, they can argue the increased cost is being returned to the taxpayer.'