Spending Review: Rishi Sunak plans to reform anti-Northern spending bias

The government has confirmed it will make a major reform to the way it assesses the value for money of big spending projects.

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 changes 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 rules used to determine the value of major schemes – was altered so the regional impact of transport, energy and educational projects was given greater weight.

It will mean - as the first portions of £600bn in planned public investment are delivered - the process of ranking transport, energy, schools or hospital investment will be widened beyond a narrow definition of benefit compared to cost.

Those calculations, the Treasury now acknowledges, have inherently favoured the government investing continuously in the South East of England and London.

That is because the values of economic return are influenced by existing high property prices in those regions.

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