Chancellor Rachel Reeves is pushing ahead with plans to borrow billions more for infrastructure investment, despite concerns about rising government debt costs, according to reports.
She told the cabinet she aims to revise how the Treasury accounts for capital spending to reflect its long-term benefits - a resetting of the so-called fiscal rules.
This move could free up as much as £50 billion for big projects, such as roads and schools, by considering government-held assets.
However, some officials worry this could lead to higher borrowing costs.
Reeves is also exploring tax increases, including levying VAT on private school fees and tightening rules for non-domiciled taxpayers.
Amid concerns about rising interest rates, Reeves remains committed to long-term infrastructure investment while balancing immediate budget pressures.
The plans involve revising the 'public sector net debt' measure to recognise the financial value of assets created by government spending on infrastructure and green energy projects.
Yesterday, a group of pension funds that manage £1.7 trillion of assets, including the UK’s Universities Superannuation Scheme, urged Reeves to push on with the plans, saying it would encourage more investment.