New Treasury rules “to allow more investment in the North and the Midlands” | News from the UK

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It is understood that the Treasury plans to rewrite its rules to allow for greater investment in areas such as Northern England and the Midlands, after years of complaints that the current system is too favored in London and the South East.

The change in the way the Treasury should assess the economic benefits of spending before the spring budget was welcomed by the Northern Powerhouse Partnership, the government’s economic cheerleader and North Coordinator.

Government investment decisions are currently based on gross value added, a metric that assesses the net financial contribution of spending to the economy.

Critics have long argued that this is a blunt metering system that overestimates the concentration of businesses and people because it considers them more efficient and therefore disadvantages regions from London and the South East.

According to the Times, which originally reported policy change, the new rules would introduce spending metrics, such as improving people’s well-being in certain areas or reducing regional productivity disparities.

Jim O’Neill, economist and vice president, vice-chairman of the Northern Powerhouse partnership, stated that “a static, value-based accounting approach for assessing investment projects is meaningless”.

He added: “By definition, this increases the attractiveness of projects in densely populated, economically pulsating areas – usually in London – and does not allow for potentially large projects to increase productivity elsewhere, including many in the North and in particular the Northern Powerhouse Rail. .

“I really welcome the change in this approach and hope it is real. This would be a huge impetus for many investments across the country, as well as in the whole ‘Northern Power Plant’. “

The Treasury spokeswoman said: “We work across the government to ensure that investments are targeted where they are needed in the UK and bring value-for-money to taxpayers.”

Changing investment rules would be part of the widespread attempt of the Boris Johnson government to support the Midlands and the North, where conservatives have won a number of key seats in the general election.

During the campaign, Johnson promised to increase investment in transport infrastructure as well as in areas such as NHS, education and police, after nearly 10 years of cuts.

During the election campaign, Labor strongly called for a change in approach, with investments to alleviate regional economic disparities, and part of the Treasury moved north to oversee more decentralized spending decisions.

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