The government announced plans to invest £3bn in infrastructure projects with a focus on developing regional centres.

The Chancellor confirmed that the government has accepted many of the recommendations in the Heseltine report into regional development, including the proposal for a 'single competitive pot of funding for regional development', which will be devolved to the local level through new Local Growth Deals. The new fund will be operational by April 2015.

'By investing in the economic arteries of this country we will get growth flowing,' Osborne said. 'Public investment is higher on average than in whole period of last Labour government.'

However, against a continuing poor economic performance, Osborne indicated that the government will review its strategy in June.

'In June we will set out long-term spending plans for the capital budget, the second thing we will do to support enterprise is to give our regional cities and other local areas much greater control over their economic destiny.'

This represents a radical move away from central government control with a move to decentralisation, so that the responsibility for decisions on how funding should be spent is taken by those with knowledge of, and a stake in, the local area. Funding will be allocated to LEPs on the basis of strategic multi-year plans for local growth.

For small business, there are also plans to increase government procurement contracts five-fold by changing the current procurement contracts.

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