UK government to reform anti-Northern spending bias

The UK government plans to make a major reform to the way it assesses the value for money of government investments in big projects. In another word, the government is going to remove a longstanding bias affected funding for northern England and other regions.

As BBC reported, Chancellor Rishi Sunak said the changes, to be unveiled at next week’s Spending Review, would allow those “in all corners of the UK to get their fair share of our future prosperity”.

He calls it the “levelling up” agenda.

Part of what will change is the Treasury’s Green Book – a set of rules it uses to determine the value generated by government schemes.

It will mean – as the first portions of £600bn in planned public investment are delivered – the process of ranking transport, energy, schools or hospital investment will be widened beyond a narrow definition of benefit compared to cost.

Those calculations, the Treasury now acknowledges, have inherently favoured the government investing continuously in the South East of England and London.

That’s because the values of economic return are influenced by existing high property prices in those regions.

For example, a transport link between London and Reading would always have ranked as better value for money for the taxpayer than linking two northern cities.

The new process will update the equation to prioritise investments with regional impact, which help Mr Sunak’s levelling up plan and the government’s green objectives.

The changes will form part of the long-delayed National Infrastructure Strategy, to be published alongside the Spending Review.

Some £1.6bn will also be allocated to tackle potholes on local roads in the next financial year.

The infrastructure strategy will cover flagship programmes such as fibre broadband, flood defences, and major transport schemes.

The Spending Review will also see the launch of the UK Shared Prosperity Fund, under which money previously allocated to poorer regions by the European Union will now be spent by the UK government.

A UK Investment Bank will also replace the functions of the European Investment Bank, after the end of the Brexit transition period.

The government hopes to be able to use more private sector capital, and to align the bank’s investments more closely with UK economic strategy, for example on climate change.

The Chancellor also confirmed the Treasury will move some staff to a new base in the north of England next year, as part of a shift of 22,000 civil servant roles out of London and the South East.

The location of the new headquarters will be announced “in the coming weeks”.

Anneliese Dodds MP, Labour’s Shadow Chancellor, called for Mr Sunak’s Spending Review to “set the country on the right path”.

“Communities up and down the country don’t want to hear more empty rhetoric from this Government,” she said.

“The Conservatives have been in power for ten long years, but their track record is a litany of failure and broken promises.”

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