Rishi Sunak fires starting gun on infrastructure projects to tackle North-South divide
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Rishi Sunak will next week commit tens of billions of pounds to major infrastructure projects as he promises to finally remedy the North-South divide despite the toll taken by coronavirus on the public finances.
The Chancellor will set out his first national infrastructure strategy and make a "massive downpayment" on the £600 billion of investment promised by Boris Johnson to "level up" the country.
Having declared himself a "Northern chancellor", Mr Sunak will seek to demonstrate his commitment to the region by firing the starting gun on major projects including fibre broadband, flood defences and road and rail schemes.
He is expected to allocate money to the Department for Transport to launch Northern Powerhouse Rail, linking together major Northern cities, although concrete plans are not expected until the integrated rail plan is published next month.
The Chancellor will overhaul the Treasury's investment rules, blamed for historically skewing funding towards the South-East and London, with decision-making focused on long-term objectives over instant results.
The so-called "Green Book", which currently focuses on short-term return on investment, has been rewritten so that decision-makers give greater weight to left-behind regions rather than "focusing on a purely economic assessment that doesn't consider who benefits".
Mr Sunak will also reaffirm the Government's commitment to relocating swathes of the civil service out of London, with 22,000 jobs due to be moved to areas including the Midlands, the North-West and the North-East.
The Treasury will set up its Northern headquarters next year and is due to announce the location in the coming weeks.
Speaking ahead of next week's Comprehensive Spending Review, Mr Sunak said: "We are absolutely committed to levelling-up opportunities so those living in all corners of the UK get their fair share of our future prosperity.
"All nations and regions of the UK have benefited from our unprecedented £200 billion Covid support package. And after a difficult year for this country, this spending review will help us build back better by investing over £600 billion across the UK during the next five years."
Henri Murrison, the director of the Northern Powerhouse Partnership, said: "Subject to the confirmation of the Northern transport schemes, such as the Northern Powerhouse Rail network including the new line from Leeds to Bradford, on to Manchester and beyond, we're confident the Chancellor can prove his personal commitment to decentralising power away from Whitehall.
"He has renewed the case for devolution, alongside addressing educational inequalities here in the North, which has yet not seen sustained focus from the Department for Education despite the significant divide between disadvantaged pupils here and their counterparts in London."
Mr Sunak is also studying plans for a state development bank to help fund infrastructure projects, Government sources said.
The proposals, backed by Alok Sharma, the Business Secretary, would leverage public money to raise additional private finance to fund projects across the country.
It comes as Mr Sunak, the MP for Richmond in North Yorkshire, seeks to reassure dozens of Northern and "Red Wall" Conservative MPs who make up the Northern Research Group and fear their areas will bear the brunt of a pandemic-induced recession.
Alongside the one-year spending review, Mr Sunak will publish the national infrastructure strategy, which will set long-term targets for levelling up and hitting the Government's target of reaching net zero carbon emissions by 2050.
The strategy will include targeted investments in transport, digital infrastructure, housing, energy and a shift to green industries and technologies.
Amendments to the "Green Book" will mean that business cases for all project spending proposals will be required to set out how they align local strategies.
It comes on top of the £3.6 billion fund for left-behind towns and coastal communities, with Mr Sunak due to announce £220 million of funding for local pilot programmes.
Northern mayors and businesses have long argued that the current approach to allocating funding is skewed in favour of the South due to high property prices and already high levels of economic growth, thereby serving only to reinforce inequalities.
On Friday, a Government source said: "It's like a trap because property prices are greater in the South. If you do an assessment of worth, it is always worth more in the South. If you are levelling up, the starting point is does it help with levelling up. If it does, then you can look at what's the most efficient way of doing it.
"We're going to make sure that you don't even look at the other part until they've worked out if it is delivering on our objectives."
Meanwhile, Whitehall jobs, including those at senior levels, are expected to be moved to cities including Birmingham, Manchester and Leeds, as well as another site in the North-East. It would take well-paid public sector jobs to less prosperous parts of the country, while potentially producing savings for the Government by shedding expensive office buildings in the capital.
At the same time it would expose more civil servants to non-London life, which could alter the way policy and spending decisions are made.
"The country is so over-centralised, with the most highly paid civil servants all concentrated in one place," said Andy Street, the Mayor of the West Midlands. "They cannot be close to the issues on the ground in the regions. It would be so much better if they were embedded here rather than all being in central London."
Ministers will be expected to visit their departmental staff across the country frequently, similarly exposing them more regularly to life beyond Whitehall.
"It would show a genuine, long-term commitment to levelling up," said Ben Houchen, the Mayor of Tees Valley. "If you have got senior civil servants in regions like Teesside, policies will better reflect those areas. Relocating to cities like Birmingham or Manchester doesn't change that dynamic – bringing them to Teesside would."
