The north of England has for years complained, not without justification, that it is relatively ignored by government when it comes to general funding and investment in infrastructure improvements especially, while its largesse over-focuses on an already wealthy south.
One key reason for this has been held to be the way the Treasury’s Green Book operates to favour investment in areas where the economic return would be greatest, which for technical reasons built into the Green Book’s analytical approach, ensures the south gets a bigger slice of the cake. It becomes a self reinforcing approach, where the more the south gets, the wealthier it becomes, so the more it gets.
Analysis by the Institute for Public Policy Research (IPPR) and IPPR North suggests that if the north had received the same per capita spending as London, it would have had an extra £140 billion over the last 10 years. In the decade to 2022-23, London received £1,183 per person per year while the north got only £486 of transport spending per person.
Recent election results may have shocked the government out of complacency over the strong case that northern counties have for distributing more public sector investment in their direction. Increased local transport investment in northern areas was announced earlier this year. Now reform of the Green Book has been announced following a review. A new Taskforce bringing together the Treasury, the communities and transport departments and participants from local and regional government is being formed to develop an approach to building place-based business cases and oversee the implementation of a new approach across the public sector, Chancellor of the Exchequer Rachel Reeves announced alongside her Spending Review.
Since then we have heard that the government also plans to reallocate £2 billion of council grant funding from wealthy southern areas to the north. An eight week consultation is being opened on “progressive” redistribution of local authority funding.
Local government minister Jim McMahon said that councils were on their knees after 14 years of funding cuts and managed decline by the previous Tory government. He said the formulae used to assess local authorities’ current needs, which are a decade out of date, will be updated to target money where it needs to go and ensure those places that have been overlooked now get their fair share.
About half of council’s income comes from some £70 billion a year in government grants, with the rest coming from council tax and business rates. Council taxes might have to rise in southern areas. Many people on low incomes in northern areas are said to have been paying more council tax than some wealthier individuals in prosperous southern counties, where there are fewer financial demands on authorities.
Ministers are expected to promise a funding floor, capping how much a council’s grant income can fall. That might sweeten the pill for southern areas, but although the north has suffered years of inadequate infrastructure investment the south hasn’t exactly been awash with it either. The issue has been lack of investment across the UK, even if the north has borne the brunt of that. Hopefully recent government announcements (see our Analysis section article) herald a change.
Nick Barrett
Editor