Northern Powerhouse Partnership and Transport for the North welcome prospect of change to Treasury spending rules

Lord Jim O'Neil speaking at The Great Northern Conference 2019 at New Dock, Royal Armouries in Leeds. Picture by Tony Johnson.
Lord Jim O'Neil speaking at The Great Northern Conference 2019 at New Dock, Royal Armouries in Leeds. Picture by Tony Johnson.

Business and political leaders have welcomed a suggestion that the Treasury's spending rules could be altered to help boost investment in the North as the Tories try to deliver for their newly-won voters.

Investment decisions would take into account improving people's wellbeing or narrowing the productivity gap with the South and focus less on overall national economic growth under plans reported by The Times.

Henri Murison. Picture: Jonathan Gawthorpe.

Henri Murison. Picture: Jonathan Gawthorpe.

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The proposals being considered ahead of the spring Budget would affect how officials work out the value for money of investments in transport, business development and other initiatives.
Prime Minister Boris Johnson has stressed that the Conservatives must work hard to maintain the voters who may have "lent" their backing in order to implement Brexit.

The Tories' secured support in Labour's former heartlands in the North and the Midlands and the Prime Minister will be working to maintain the newfound voters.

According to Government documents, the Treasury's approach to investment currently follows a 'value for money' policy that aims to use "public resources in a way that creates and maximises public value" - which is "defined as the total well-being of the UK public as a whole".

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This means that value for money is considered at a national level, not just in terms of how it will affect the local area in which a proposal operates, but The Times piece suggests a break from such policy under Mr Johnson's government.

Reacting to the news, Lord Jim O'Neill, Vice-Chairman of the Northern Powerhouse Partnership (NPP), said: "I have long since believed, going back to the earliest discussions about devolution when I led the Cities Growth Commission and through to my time at Treasury, that the static, accounting-based approach of value for money in assessing investment projects does not make any sense.

"By definition, it adds to the attraction of projects in heavily-populated, economically-vibrant areas - usually London - and doesn't allow for potential major productivity-enhancing projects elsewhere, including many in the North, and especially Northern Powerhouse Rail.

"I truly welcome a change to this approach, and hope it is for real. It would be a huge boost for many investments across the country, as well as throughout the Northern Powerhouse."

Henri Murison, NPP director, added: "The New Year promises to be a positive one for Northern Powerhouse if the Budget is as positive for economic rebalancing as this and other recent signs.

"It will be a testament to having those like Rishi Sunak MP as Chief Secretary at the Treasury, who understand the importance of closing the North-South divide both economically and politically for his own party's long term prospects once Brexit and Labour's leadership are less of a concern in voter's minds."

“Transport for the North have long been developing the case for a more transformational model that looks at value beyond a straightforward financial return on investment,” said a spokesperson for the organisation.

“The current approach clearly isn’t working. The effects of decades of underinvestment in our region are clear to see in the creaking infrastructure and lack of connectivity that our people and businesses are putting up with every day. The North has been at the back of the investment queue for too long and it is crucial that this underfunding be addressed in order to support the North’s ambitions.

"Now is the time to invest in the North and set out a devolved, multi-mode budget that will allow Northern leaders the flexibility to tackle regional transport issues most effectively. Moving away from traditional funding models, which result in money being focused in areas that are already the most successful, towards the transformational models we’re demonstrating in our businesses cases for projects including Northern Powerhouse Rail, would truly rebalance the UK economy and boost the productivity, wellbeing and opportunities of our region’s 15 million people.”

A Treasury spokesperson said: "We work across Government to ensure investment is focused on where it is needed across the UK and delivers value for money for the taxpayer."