Chancellor Rachel Reeves is expected to reprioritise funding outside of London and the South East – with tens of billions of pounds of investment in road, rail and green energy projects
Rachel Reeves is preparing to divert billions of pounds of investment into the North and the Midlands by rewriting key Treasury rules.
The Chancellor will use next month’s Spending Review to reprioritise funding outside of London and the South East of England – unlocking tens of billions of pounds of investment in road, rail and green energy projects. She recently told The Guardian she was planning “£113bn more in capital spending than the plans we inherited” from the Tories.
It comes amid alarm from Labour MPs over the threat from Reform UK in their heartlands and the prospect of cuts to day-to-day spending in unprotected Whitehall departments.
Treasury value-for-money rules assess investment in areas where the economy is already doing well as having the biggest impact on growth.
Critics say the rules in the so-called Green Book bake in a bias towards the South East, favouring an expansion of the Tube to a tram network in a northern city.
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But Ms Reeves committed to review these rules earlier this year, with the announcement expected alongside the Spending Review in mid June.
Speaking in January, she said: “As the metro mayor of Liverpool, Steve Rotherham, has called for, we will review the Green Book and how it is being used to provide objective, transparent advice on public investment across the country, including outside London, and the South East. This means that investment in all regions is given a fair hearing by the Treasury that I lead.”
Boris Johnson ordered a review of the rules to allow an infrastructure boom in the North of England in a bid to cling onto Red Wall voters that backed the Tories in the 2019 election. But the changes never materialised.
This week, Keir Starmer said Nigel Farage’s party was Labour’s biggest electoral threat and dismissed the Tories as “sliding into the abyss”.
On a visit to St Helens, the PM said Reform’s economic plans risked a repeat of the market mayhem caused by Tory PM Liz Truss.
Mr Starmer said: “He [Farage] set out economic plans that contained billions upon billions of pounds of completely unfunded spending, precisely the sort of irresponsible splurge that sent your mortgage costs, your bills and the cost of living through the roof. It’s Liz Truss all over again.”
Reform’s local election performance has sparked jitters in both Labour and Tory circles after the party seized control of 10 English councils and won the Runcorn and Helsby by-election by just six votes.
However officials pushed back on the idea that the Chancellor’s plans were a response to Reform – pointing to Ms Reeves’s commitment to a review in January.
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