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UK chancellor Rachel Reeves has signed off plans to spend billions of pounds on a new railway line between Manchester and Liverpool and other urban transport upgrades as part of next week’s government spending review.
The transport plan, part of a £113bn investment in capital projects over the rest of the parliament, will be billed as evidence that the chancellor has a strategy for boosting growth outside London and the south-east.
Reeves settled the Department for Transport’s multiyear budget on Monday, according to government officials, ahead of the conclusion of the spending review on June 11.
But ministerial haggling continues with the Treasury over funding for other sensitive areas such as housing, local government, policing and green energy schemes.
Reeves has promised to free up more than £113bn for infrastructure projects after rewriting her fiscal rules to allow more long-term capital investment.
The Treasury’s “green book”, which assesses value for money for public projects, is also being overhauled to give extra weight to schemes that improve productivity in areas including the north and Midlands.
Among the projects set to receive her backing is a new railway line between Manchester and Liverpool, which the cities’ mayors believe could substantially boost national growth.
Metro mayors are also hopeful of more ambitious local transport funding settlements than had been expected.
Local priorities include a new tram extension in Birmingham, as part of plans to regenerate one of the city’s most deprived communities around Birmingham City Football Club.
In the north-east, local leaders have long wanted to reopen the mothballed Leamside railway line, while West Yorkshire, the largest urban area in Europe to lack a metro system, is working up plans for a mass transit network.
The government’s “Transport for City Regions” package includes schemes earmarked for funding by former Tory premier Rishi Sunak in 2023 after he scrapped the northern leg of the HS2 high-speed rail line.
Sunak’s £36bn “Network North” project, funded by savings from the HS2 scheme, included £12bn to “better connect” Liverpool and Manchester.
A new railway line between Manchester and Liverpool is expected to gain backing, according to five people familiar with the plans, following concerted lobbying by Andy Burnham and Steve Rotheram, the cities’ metro mayors.
Since last summer they have been urging ministers for a firm commitment to their plan, which would result in a new line, built in phases. Ultimately that could also connect to any future replacement for HS2 heading north from Birmingham.
The extent of the chancellor’s financial backing for the idea — which is likely to take until the 2030s or 2040s to build — remains unclear, but one person familiar with the government’s thinking said it would involve more than just development funding.
The Treasury has been approached for comment. Reeves’ allies confirmed the chancellor is preparing to announce major capital investments in transport, green energy schemes and other infrastructure projects.
Next week’s spending review will set out capital allocations for Whitehall departments for the next four years, with day-to-day spending set for three years.
The run-up has been dogged by fighting between the Treasury and ministers lobbying for more generous settlements, as the chancellor battles a sluggish economy, restrictive tax commitments and crises in public services.
Regional leaders had long complained that the Treasury’s green book had prioritised investment in parts of the country that are already productive, such as the south-east, rather than those areas in need of an initial stimulus.
The new rule book, plus the splurge in investment, will seek to counter regional concerns sparked by Reeves’ pro-growth speech in January, which focused predominantly on the expansion of Heathrow and development between Oxford and Cambridge.
