Spending Review: Sunak's plans to reform decades-long anti-northern spending bias tentatively welcomed

Northern leaders have tentatively welcomed government plans to rip up rules for the way major infrastructure funding is allocated – which currently favour the south-east.

Chancellor Rishi Sunak said he will remove and reform longstanding bias, which sees less investment directed to the regions than the capital and its surrounding towns.

The redrawing of the rules would come in Wednesday’s Spending Review and would be made as part of the government’s “levelling up” agenda, he said.

It would mean the Treasury’s famed Green Book – a set of principles used to determine the value of major schemes – was altered so the regional impact of transport, energy and educational projects was given greater weight.

Mr Sunak said the changes would allow those "in all corners of the UK to get their fair share of our future prosperity".

Responding to the announcement, Henri Murison, director of the Northern Powerhouse Partnership, which represents the regional business leaders, said such reforms had been long-called for and were "crucial to re-balancing the economy".

But he said much more needed to be done to truly address what had been seen as decades of southern bias.

“We now need to create a shared prosperity fund to boost productivity, which remains the central barrier to overcoming the north-south divide,” he said.

“Subject to the confirmation of the northern transport schemes, such as the Northern Powerhouse Rail network including the new line from Leeds to Manchester, we're confident the chancellor can prove his personal commitment to decentralising power away from Whitehall.” 

Jake Berry, chair of the Northern Research Group of Conservative MPs, said the plans showed promise.

“It was one of the most frustrating things I found, when I was Northern Powerhouse minister, was you would sort of come against this calculation that always preferred Reading over Rossendale,”  he told BBC Radio 4's Today programme.

The Rossendale and Darwen MP added that the formula must not just be reformed. “Chuck it into the shredding machine,” he said.

The chancellor's planned changes will form part of the long-delayed National Infrastructure Strategy, to be published alongside the Spending Review.

Some £1.6bn will also be allocated to tackle potholes on local roads in the next financial year, while a scheme will be launched to allocate UK money to poorer regions which would have previously received greater European Union funding.

In a bid to consolidate the regional shift, some Treasury staff will move into a new northern base, it will also be announced – part of drive to get 22,000 civil servant roles out of the South East.

The location of the new headquarters will be announced "in the coming weeks".

Anneliese Dodds, Labour's shadow chancellor, appeared to support the theory behind the proposed reforms.

But she warned: “Communities up and down the country don't want to hear more empty rhetoric from this government.

"The Conservatives have been in power for ten long years, but their track record is a litany of failure and broken promises."