Go-ahead for £108m bypass after 60 years

Chancellor George Osborne is today expected to underwrite the £108 million South Devon bypass as he unveils the Government's flagship plan to jump-start the British economy.

A 3.4-mile link road between Newton Abbot and Torquay, which would bypass the village of Kingskerswell, could create 8,000 jobs by slashing journey times for tourists and business.

The Chancellor is expected to include the scheme, first proposed in 1951, among 40 big ticket construction projects given the go-ahead in today's autumn statement.

The Government is expected to provide £76 million to the bypass, with the rest coming from local authorities. The decision, which will ease traffic on a notorious stretch of the A380 into Torbay, is a "tremendous vote of confidence in South Devon", one MP said last night.

Against a backdrop of gloomy economic predictions, the Chancellor will today set out plans for an ambitious £30 billion investment programme in Britain's roads, railways and the high-speed broadband network.

The Tory minister will highlight 5,000 infrastructure projects that the Government has committed to, including 40 "shovel-ready" projects brought forward after being held up by Whitehall officials.

Adrian Sanders, Liberal Democrat MP for Torbay, said: "While we have been putting the case for the bypass for years, ultimately thanks must go to Nick Clegg's pledge to prioritise and bring forward infrastructure projects.

"The Government's decision is also a tremendous vote of confidence in South Devon. This will be the basis for rebuilding the local economy, which has been overlooked for too long."

John Hart, Conservative leader of Devon County Council, which joined forces with Torbay Council to lobby Government on the merits of the scheme, said: "We await the Chancellor's statement, but I am very hopeful that this speculation will be proved correct.

"This has been an excellent example of councils, businesses, MPs and the wider community working in partnership.

"Even in these financially straitened times, we have hopefully proved that, by combining our resources and our expertise, we can still achieve significant developments that will improve the lives of thousands of people and provide a major boost to the whole economy of South Devon."

Anne Marie Morris, Conservative MP for Newton Abbot, said: "Getting the money to finally make the South Devon link road a reality has been a priority of mine since being elected to Parliament last year.

"This represents a significant investment, not just in my constituency but for the whole of South Devon, and I am delighted that this long-discussed road looks set to finally get the green light."

The decade-long infrastructure programme will see £10 billion of Government money used as bait to lure an extra £20 billion of private investment from pension funds. Ministers will be under pressure to explain where the money is coming from, with most commentators expecting a squeeze on tax credits for low-income families.

The Chancellor's autumn statement – which replaces the Pre-Budget Report – is likely to be set against the Office for Budget Responsibility downgrading its official growth forecast for this year for a second time to around 1 per cent.

Help for small businesses, the rural economy and youth unemployment will also feature in the statement to the Commons.

Rachel Reeves, Labour's Shadow Chief Secretary to the Treasury, warned: "Only genuinely additional or brought-forward investment in projects that are 'shovel ready' would both make an immediate difference to our flatlining economy now and help strengthen the economy for the future."