Rachel Reeves to review Treasury 'Green Book' rules to unlock billions of pounds investment in the North

Northern leaders have long argued these calculations have to be reformed, saying they currently favour investment in wealthier areas, such as London, as they focus on short-term gains.

Greater Manchester Mayor Andy Burnham said “the current approach is not working for the North of England”.

Henri Murison, chief executive of the Northern Powerhouse Partnership, said this was “one of the biggest decisions” Ms Reeves has made.

It comes after she changed how debt is calculated at the Budget to ensure more money can be spent on capital investment.

Another Yorkshire chancellor, Rishi Sunak, reviewed the Green Book in 2020, saying urgent reform was needed “to make the promise of the Northern Powerhouse and the wider benefits of economic rebalancing … a reality”.

Now Ms Reeves, who is also the MP for Leeds West and Pudsey, has said it will be changed again to drive regional growth.

The Treasury said this will “provide objective, transparent advice on public investment across the country”.

Mayors are expected to be consulted on the changes, which will be unveiled at the conclusion of the Spending Review in the summer.

Leeds North West MP Katie White explained: “The Treasury's proposed changes to the Green Book may sound technical, but they open up a huge opportunity for Yorkshire.

“These changes will unlock more funding, providing a direct boost to our economy and the people who live here.

“Yorkshire is the ideal place for new investment — we have the talent, the ambition, and the resources to lead in growth and innovation, from our emerging tech and green energy sectors to our well-established manufacturing and financial services industries.”

This was announced alongside new strategic partnerships between the National Wealth Fund and regions including West Yorkshire and Greater Manchester.

However, the Green Book changes were the reforms that Mr Burnham picked out amongst the Treasury announcements.

He said: “We particularly welcome the opportunity to work with government to review the Green Book and how it is used to steer public investment, as the current approach is not working for the North of England.”

IPPR North’s senior research fellow Marcus Johns explained: “The Green Book has long been a challenge in terms of the way particular projects have high levels of impact according to its appraisals.

“This has often meant that projects in the North haven’t looked as high value for money as they could have.

“Certain types of investment don’t just generate a linear impact which you can model, but they can fundamentally change the economic path that a place is on.

“The Green Book doesn’t really capture that, or non-monetary benefits, very well.”

Mr Murison said the proposed changes would make it more likely for Bradford’s new train station to be approved.

“What we need is a Green Book that encourages the Government to invest in the North of England, particularly in innovation, net zero and transport infrastructure.

“There is a significant economic dividend for the country in doing this. There has been massive underinvestment in this for the last decade, and it’s one of the reasons the UK’s productivity is so low.”

He added: “What is good for the North’s economy is essential for the UK public finances.”

But one official, who worked on Mr Sunak’s changes, told The Yorkshire Post that a “cultural shift” is also required in Whitehall to boost funding towards the North.

“The written changes that were made previously at a Treasury level have not necessarily filtered through to departments,” they said.