The wider debt measure is expected to allow for up to £50bn more borrowing to invest in big projects in roads, railways or hospitals.

Under previous government spending commitments investment was due to fall from 2.6% of the share of the economy in 2023 to 1.7% by 2028-29, or £20bn a year in cash terms.

The move comes as a huge relief for civil engineering contractors who were braced for big cuts to road and rail programmes, in particular.

The Chancellor said the Treasury would “be putting in guard rails” on investment spending to ensure value for money.

Writing in the Financial Times, Reeves said: “We will invest alongside business, through expert bodies like the National Wealth Fund, multiplying the impact of public money.

“And I will invest wisely — we won’t just increase investment, we will also invest differently. We won’t repeat the costly mistakes of the past.

“A new set of institutions will focus on ensuring value for money and a strategic plan to deliver infrastructure, a combination of the National Infrastructure and Service Transformation Authority, who will clear the way for the delivery of infrastructure, and the Office for Value for Money will rigorously scrutinise spending.

“This will be matched with a new set of standards with a focus on transparency, backed by robust auditing by the National Audit Office.”