Yorkshire near 'top of the list' to benefit as Rachel Reeves changes fiscal rules for Budget

Since coming to power in July, Sir Keir Starmer has had a rocky few months.

Scandals around freebies have distracted from a government which is promising to bring about change.

Now even Donald Trump is hitting out at the Prime Minister, accusing the Labour Party of breaking federal electoral law in the US.

So Wednesday feels make or break for this government.

It will be quite a moment, the first Budget from a female Chancellor - coming from a long line of Labour chancellors from Leeds.

Ms Reeves will have to walk the tightrope of putting into crumbling public services, like the NHS and prisons, while keeping to the manifesto pledge of not raising taxes “on working people”.

As such, expectations are that there could be a rise in employer national insurance contributions and also capital gains tax.

Ms Reeves has confirmed she will make a technical change in the way she would measure progress against the target of managing debt, which should free up billions of pounds for capital spending.

She explained to ITV News: “Our investment rule will change the way in which we measure government debt so we take into account our assets, not just the costs of investment.”

This small change could have a potentially huge impact on Yorkshire.

Had this been used as the debt target in the March 2024 budget, the “headroom” – the margin by which the fiscal rule is met – would have increased by £53 billion, according to the Institute for Fiscal Studies.

And with all the noise from the government about reducing regional inequalities, you would hope our region would get a lot of big investment.

Henri Murison, chief executive of the Northern Powerhouse Partnership, told me that tweaking the fiscal rules was his group’s main hope in the Budget, with the assumption that this will boost infrastructure projects across the North.

“Hopefully this will mean money for a new station in Bradford and the new hospital in Leeds,” he said.

“Yorkshire will on merit be near the top of list for the capital spending freed up in the Budget to deliver the aspiration of growth across the UK. 

"If we have to pay a bit more in tax for day to day spending alongside this then so be it.”

Both Mr Murison and South Yorkshire Mayor Oliver Coppard are hoping for good news with Northern Powerhouse Rail.

The long-promised high-speed rail route from Hull to Liverpool, including Sheffield, Leeds and Bradford, is seen as key to improving connectivity and driving growth across the region.

Mr Coppard told me that he has been worrying about this “since the day I became mayor, I certainly worried about that under the last government".

“I am absolutely clear-eyed that this is hard to do because the previous government made commitments they couldn’t keep,” he added.