LONDON (Reuters) - Britain’s finance minister freed up an extra 23 billion pounds on Wednesday to invest in rail, telecoms and housing infrastructure over the next five years to help boost the country’s output.

A cable car is seen near construction cranes in East London, Britain November 2, 2016. REUTERS/Kevin Coombs

The National Productivity Investment Fund will be spent on infrastructure and research and development including on science and technology, Chancellor of the Exchequer Philip Hammond said in his first Autumn Statement address to parliament.

“Economically productive infrastructure directly benefits businesses, but families, too, rely on roads, rail, telecoms and especially housing,” he said.

After greenlighting multi-billion-pound projects to expand Heathrow airport and build a new nuclear reactor at Hinkley Point, Hammond’s statement contained a series of relatively modest proposals, although he said more was on the way.

He said the government would invest between 1 and 1.2 percent of GDP on economic infrastructure from 2020, compared with 0.8 percent currently, and had asked the National Infrastructure Commission to advise on future projects.

In March, the government’s National Infrastructure Delivery Plan 2016-2021 had flagged a pipeline of projects worth some 483 billion pounds across a range of sectors that need to be delivered.

The effect of unaffordable housing on Britain’s productivity makes building more houses an urgent priority, Hammond said, flagging up plans for a 2.3 billion Housing Infrastructure Fund, to help unlock land for housing.

“Over the course of this parliament, the government expects to more than double in real terms annual capital spending on housing,” Hammond said.

A further 1.4 billion pounds will be released for affordable housing, while housing providers will be allowed to build a wider variety of housing types, Hammond said.

“Overall, logistics property will probably benefit the most from this Autumn Statement, thanks to the infrastructure and house building investment,” said James Roberts, Chief Economist at property research firm Knight Frank.

TRANSPORT, DIGITAL

The government will also spend 1.1 billion pounds on local transport networks in England, 450 million pounds to trial digital signalling on the railways and money to help boost uptake of electric vehicle infrastructure, Hammond said.

A further 1 billion pounds will be spent on upgrading the digital infrastructure, including in 5G technology, and Hammond also confirmed a plan to spend an extra 2 billion pounds on R&D by 2021, announced by Prime Minister Theresa May on Monday.

Alongside the planned High Speed 2 rail line, Hammond said the Transport Secretary would detail new projects “in the coming weeks” tied to its flagship “Northern Powerhouse” plan to rejuvenate economic growth in the north of the country.

In a world of low market returns, many pension funds and insurance companies are keen to invest in high-quality infrastructure, which can pay a steady income over many years, although bigger funds need bigger projects.

“More modest projects such as broadband extensions or improvements to local roads, while vital to the economy of the regions they benefit, are not on a sufficient scale to help pension funds,” said David Curtis, Head of UK Institutional Sales at Goldman Sachs Asset Management.

“In principle, there should be a positive feedback loop between the UK’s need for infrastructure and the pensions industry’s need for assets but those assets need to offer the cashflows and inflation protection that schemes require.”

Importantly, the government said it would “recommit” to a plan to give Treasury backing to projects under the UK Guarantees Scheme until at least 2026, and look into the idea of issuing construction-only guarantees.

The government said it would also develop a new pipeline of projects to be delivered under Private Finance 2, a public-private initiative, and announce them in early 2017.

“There is no shortage of funds to invest in UK infrastructure. What is lacking are the appropriate assets and the right deals to invest in,” said Merrick Cockell, chairman of the London Pensions Fund Authority.

“Hopefully an economic infrastructure plan will include how to finance such developments and involve potential asset owners, such as UK pension funds, right from the beginning.”