Exclusive:Rachel Reeves must not let gilt turmoil scare her off investments in North, Lord O'Neill says
Rachel Reeves must not let the recent turbulence in the gilt market stop her from investing in major infrastructure projects in the North, Lord Jim O’Neill has said.
The former Treasury Minister and chair of the Northern Powerhouse Partnership told The Yorkshire Post the UK “desperately needs” great private and public investment.
In the Budget, the Chancellor announced she was changing the way debt was calculated to free up more funds for capital infrastructure.
Yet many of the projects highlighted by Ms Reeves in her growth speech will either be privately financed, like a third runway at Heathrow, or come from devolved funding, such as reopening Doncaster-Sheffield Airport.
Lord O’Neill said: “I really welcomed the Chancellor changing the fiscal rules.
“The framework she has created with a focus on the supply side, public sector investment and infrastructure projects will help growth.”
But the former Goldman Sachs chairman warned against Ms Reeves getting blown off course by some recent turbulence in the gilt markets, which set the price of Government debt.
“They shouldn’t be frightened by changes in the gilt yields, which had largely nothing to do with the UK in my judgement,” he said.
“They changed the fiscal rules to borrow to invest, so they should show ambition and do that.”
In the Spring, the Government will start the Spending Review and announce its 10-year Infrastructure Strategy.
And Lord O’Neill is hopeful this will include some sort of announcement around Northern Powerhouse Rail, the long-promised high-speed line connecting Liverpool with Hull, with a new station in Bradford.
He said NPR or “some version of the Elizabeth line going between Manchester and Leeds would have major positive macro effects” on the economy.
The NPP chair is also hopeful that the new National Infrastructure and Service Transformation Authority will drive investment in the North.
Chief Secretary to the Treasury Darren Jones announced Nista last year to “get a grip on the delays to infrastructure delivery that have plagued our global reputation with investors”.
Lord O’Neill said he was hopeful the new body, which will be launched in the spring, will “definitely be impactful for the North”.
“This is the best chance of seriously delivering on some of the Northern Powerhouse ideas, since it started,” he said.
The cross-bench peer added that it is also “vital” for spurring on private investment.
The NPP has been campaigning for Nista to be based in Leeds, alongside the Treasury’s new National Wealth Fund and the UK Infrastructure Bank.
Leeds South West and Morley MP, Mark Sewards, has supported calls, saying: “Alongside the National Wealth Fund, Nista would ensure that our city leads the way in securing investment into northern towns and cities.
“This would help fulfil a critical part of the Government’s mission to secure economic growth for every part of the UK.”