Treasury 'to rewrite rules to favour the North'

The Treasury is reportedly planning to rewrite rules governing public spending in a move that may benefit areas in the Midlands and North of England.

The changes, reported by the Times, would make it easier for cash to be allocated to projects outside of London and the South East.

It could help boost investment in infrastructure, business development projects and schemes like free ports.

The Treasury has not denied the reports.

Current rules require government to allocate cash to projects that promise the biggest economic benefits.

Those projects tend to have most impact in areas with more people and businesses.

But under the new plans, reported on Friday, investment decisions would be made with a focus on reducing inequality between northern and southern England, rather than promoting overall economic growth across the country.

It will affect decisions made about projects ranging from rail improvements to investment in scientific research.

Analysis

By Colletta Smith, BBC business correspondent

After Boris Johnson's electoral wins in northern England, the pressure is on to deliver on promises to spend more money improving road and rail links, and increase productivity beyond the South East.

Sources at the Treasury suggest there will some big changes at the next budget this spring.

At the moment, projects are given the go-ahead based on how much money they would add per person, which favours heavily populated areas, and tends to attract more funding to London.

New rules would allow money to be spent on different criteria - improving wellbeing and productivity imbalances across the country. That includes transport schemes and scientific research and development.

"A big project in the North will often be stimulating growth, which wouldn't otherwise happen," said Henri Murison from the Northern Powerhouse Partnership, which speaks for business and civic leaders across northern England.

But, in the South, that investment will help a regional economy that is already expected to grow significantly, he told the BBC.

"If the UK is going to succeed post-Brexit, we need to get comparable levels of growth in the North and in the Midlands," he said.

'No evidence'

But Tom Forth from the Open Data Institute Leeds said the rules on value for money were not to blame for regional spending disparities.

"For as long as we have records, far more UK government money has been invested in public transport in south-east England than in the cities of north England and the Midlands," he said.

"There is no evidence that this was because investing in London offered better value for money.

"The rules say the Treasury should invest with preference to schemes with higher value for money.

"But there is no evidence that it has done that."

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."

After his election victory, Boris Johnson thanked voters in northern England for "breaking the voting habits of generations" and placing their trust in the Conservatives.

"Everything that we do, everything that I do as your prime minister, will be devoted to repaying that trust," Mr Johnson said.