Rip up Green Book, Rishi Sunak, so Budget can invest in North – Rob Whiteman

Government investment should bring growth and prosperity to local communities, yet increasingly many of these communities feel they are not getting their fair share.

The discontent in what have been called “left behind” communities was evident following the recent general election – when the historic “red wall” across the North and Midlands, seats traditionally held by the Labour Party, collapsed in a spectacular fashion.

The emphatic rejection of decades-long political hegemony in these historically left-leaning, working class areas sent the message that people are tired of being ignored by what they perceive as remote and complacent representatives, a sentiment echoed in the 2016 Brexit referendum.

The Government under Boris Johnson has made some encouraging noises about “levelling up” areas in the North of England and other parts of the country that have suffered from years of under-investment – although their slow response to the flooding crisis calls this into question.

But let’s give the Government the benefit of the doubt: what can it do in practice? It’s right that special attention should be given to these regions.

The Budget, being delivered this week by Richmond MP Rishi Sunak, offers the Government a prime opportunity to reset expectations around where public investment is directed and take some meaningful action which could really transform those communities that have been left behind.

One of the reasons we see a spending gap between the regions in the UK is because of the Government’s own frameworks for economic appraisal. This is set out in something produced by the Treasury called the Green Book.

It provides guidance for officials on how government can most effectively finance projects and policies, everything from major projects like railways and motorways to changes to taxes and benefits goes through a Green Book analysis.

The rules currently work in a way that gives most of the immediate gains to London and the South East.

This is because the method of appraising projects is based on the higher value of land in these already affluent areas.

Reassessing the Green Book will help the Government to make effective and, hopefully, enduring changes to these rules for the benefit of the diverse groups of people throughout all regions of the UK.

A revised Green Book will support an investment strategy that helps to rebalance the economy and spread the benefits of growth and prosperity more evenly across the country.

While reform is needed on the part of central government, there is evidence that local authorities may not be using the Green Book in the best way when they draw up their investment bids and submit them to civil servants for appraisal.

Failing to use the Green Book to their best advantage means councils are losing out on opportunities for greater investment in their areas.

Providing councils with resources to navigate the book more effectively could result in fewer projects falling through at early stages of the appraisal process.

Other ways public investment is judged also need to change. Transport projects, for example, tend to be appraised on how quickly they can be delivered, rather than how much value they will add to communities in the long run. Business cases need to be evaluated with greater consideration of the environmental, social and economic impacts – positive and negative – that could potentially arise as a result.

If we continue to focus on short-term gains and quick fixes, nothing will change while further fiscal devolution also may provide some of the answers to squeezed local government funding and would also create greater local accountability.

However, levelling up the North of England and other under-represented regions can – and should – be a priority when the Government is making major investment decisions.

This begins with a fundamental reworking of the investment rule book – and some bold action on fiscal devolution – to ensure that those who have been left behind have the tools to catch up.

Rob Whiteman is chief executive of the Chartered Institute of Public Finance and Accountancy.