Rachel Reeves is set to tear up Treasury rules as she announces billions of pounds of investment in public transport in the North and Midlands.
The £15.6 billion package for mayoral authorities is expected to include funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire.
Announcing the investment in a speech in Manchester on Wednesday, the Chancellor will argue that Britain “cannot rely on a handful of places forging ahead of the rest of the country” and champion a “new economic model – driven by investment in all parts of the country”.
She is also expected to confirm that next week’s spending review will include changes to the rules in the Treasury’s Green Book that determine whether projects receive funding.
Green Book rules have been criticised in some quarters for favouring investment in London and the South East, with Labour MP Jeevun Sandher, a member of the Commons Treasury Committee, saying in April it had a “hardwired London bias”.
Ms Reeves is expected to argue that changing the rules will ensure the Government “gives every region a fair hearing when it comes to investments”.
But it will also mean more money for areas of the North and Midlands, including the so-called “Red Wall”, where Labour MPs face an electoral challenge from Reform UK.
Heidi Alexander said it is “the largest ever investment in local transport projects outside of London”.
The transport secretary said the investment would benefit Greater Manchester, Liverpool, Leeds, the North East, Newcastle, Sunderland, the Midlands and Birmingham.
“It's really critical that young people growing up in places like Bradford have a means to access the great jobs in Leeds,” she told Sky News.
Ms Alexander highlighted the success of infrastructure including the Elizabeth Line in London, but said there is “untapped potential” outside the capital the investment will unlock.
The investment announced on Wednesday includes £2.4 billion for the West Midlands to fund an extension of the region’s metro from Birmingham city centre to the new sports quarter, and £2.1 billion to start building West Yorkshire Mass Transit by 2028.
Greater Manchester will receive £2.5 billion for projects including new tram stops in Bury, Manchester and Oldham and an extension of the tram network to Stockport.
A £1.5 billion investment in South Yorkshire will include £530 million to renew the region’s trams, while the East Midlands will receive £2 billion to design a new mass transit system between Derby and Nottingham.
In the south, the West of England will receive £800 million, including £200 million to develop mass transit links between Bristol, Bath, South Gloucestershire and north Somerset.
Writing in the Manchester Evening News, Prime Minister Sir Keir Starmer said the announcement was “about pushing power out of Westminster and putting it back in the hands of communities who know what they need”.
He said: “One thing is crystal clear. We will not get the renewal we need by focussing only on the South East and ignoring the huge potential of the rest of the nation.
“For too long, the mindset of previous governments has been to hoard power and potential behind the walls of Westminster. The result? Proud places across the country have been neglected and left behind.”
Some projects being backed on Wednesday, such as the development of a mass transit network in West Yorkshire, formed part of Rishi Sunak’s “Network North” plan intended to compensate for the decision to scrap the HS2 line north of Birmingham.
After coming to power in July, Labour launched a review of those projects, arguing they had not been fully funded.
Wednesday’s announcement is the first from the spending review due on June 11 that will set out the Government’s day-to-day departmental budgets for the next three years and investment budgets for the next four.
The review is expected to be a difficult one for the Government, with the Institute for Fiscal Studies saying the Chancellor faces “unavoidably tough decisions” as the demands of NHS and defence spending raise the prospect of cuts in other departments.
