According to an Autumn Statement leak, the Chancellor will demand departmental savings of 1% next year and 2% in 2014/15 to raise extra cash for building projects.
At least £1bn of this is understood to have been earmarked to build 100 new free schools and academies, but his move raises hope that there will be extra cash for housing this time round.
Osborne will also unveil the revamped version of PFI to be known as PF2.
The centrepiece of the new Private Finance 2 initiative will be the release of the £1.75bn programme to build and refurbish 219 schools.
PF2 will also be used to build the next generation of hospitals with a new £400m Black Country hospital in Smethwick set to pilot PF2 in the health sector.
Osborne will attempt to speed up the project pipeline by setting an 18-month limit on project negotiations to avoid a re-run of the painfully lengthy PFI process where projects could take up to five years to reach financial close.
Under the overhauled PFI, the Government will become a minority stakeholder in project companies, giving it a seat on the board and a share of profits. Typically it is expected to take a stake of around 20%, but it could be as high as 49%.
Project companies will also be made to publish details of profits and also make transparent future taxpayer liabilities.
Mike Leonard, CEO of the Modern Masonry Alliance said, “This feels like it could be good news but it needs to be new money rather than just good intent.
“We also believe that money for 25000 Public Rented Homes is vital to stimulate growth, get our factories producing and provide new jobs.
“We look forward to tomorrow’s announcement and hope it is the kick start we need to Get Britain Building.”
