The Government will plough an extra £27bn into roads, rail, green technology and other infrastructure in an attempt to keep the Conservative manifesto promise to “level up” the UK.
Rishi Sunak used the spending review to announce investment in projects designed to boost long-term economic growth and improve transport links, flood defence and the environment. He also unveiled a £4bn Levelling Up Fund which will allow local councils to bid for extra funding for projects.
The i politics newsletter cut through the noise
The Chancellor insisted his changes will “fund the things people want and places need” – but critics accused him of playing political games and failing to live up to the manifesto pledges which won over previously Labour-backing areas of the country in last year’s general election.
The Government’s capital spending will reach £100bn next year, an increase of £27bn. The Treasury says that takes investment as a share of GDP to its highest level since the 1970s. The money will be spent directly on individual projects within England, with proportionate amounts distributed to the devolved administrations in Scotland, Wales and Northern Ireland.
‘Pork barrel politics’
It includes £5.2bn for flood defences in vulnerable areas, which will supposedly protect more than 300,000 homes; £3.2bn for green tech such as electric vehicle charge points, hydrogen power and carbon capture and storage; and £1.7bn to upgrade and maintain local road links.
The Levelling Up Fund will be worth £600m in its first year and will be subject to competitive bidding from local authorities and politicians. Mr Sunak told Parliament: “Projects must have real impact, they must be delivered within this Parliament, and they must command local support, including from their Member of Parliament. This is about funding the infrastructure of everyday life: a new bypass, upgraded railway stations, less traffic, more libraries, museums and galleries, better high streets and town centres.”
Labour accused the Chancellor of “pork barrel politics” which will be used for electioneering, while Greater Manchester Mayor Andy Burnham said: “Funding to invest in infrastructure is good but I think people need to look behind the headlines and slogans here because we don’t believe this will be doing much levelling up any time soon.”
Helen Barnard, director of the Resolution Foundation think-tank, warned that the infrastructure funding will not be enough to plug the shortfall left by the withdrawal of EU funding. She said: “Funding to invest in infrastructure is good but I think people need to look behind the headlines and slogans here because we don’t believe this will be doing much levelling up any time soon.” The Institute for Fiscal Studies pointed out that the spending review allocated previously announced funding rather than promising new money from the Exchequer.
Sunak’s Christmas presents for the regions
Infrastructure funding will be used to support dozens of projects across the UK over the coming years, ministers have promised.
These include £500m for transport links in Merseyside and Greater Manchester, £240m on transport in the South West and a similar amount in Leicester, Derby and Nottingham.
Flood defences will be upgraded in areas including Skegness, Boston, Sheffield and Goole to prevent a repeat of recent flooding disasters. New road projects include quicker dualling of the A66 over the Pennines, an upgrade to the A46 Coventry junctions, and building the new Lower Thames Crossing.
Norwich and Sunderland are among the cities having their railway stations upgraded. But work on Crossrail 2, a proposed line running north-south through the capital, will stop as the Government seeks to rebalance growth away from the South East.
“City deals” have been promised to areas including Glasgow, Aberdeen, Cardiff, Swansea and Belfast. They are currently the only form of infrastructure spending which is totally controlled by Westminster rather than being devolved.