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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 schemes as part of next week’s Whitehall 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 eleventh hour ministerial haggling continues with the Treasury over funding over the next three years for other sensitive areas such as housing, local government, policing and green energy schemes.
Bridget Phillipson, education secretary, settled her budget on Tuesday, leaving Angela Rayner, deputy prime minister and housing secretary, Ed Miliband, energy secretary, and Yvette Cooper, home secretary, still fighting for more cash.
Reeves has promised to free up more than £113bn for infrastructure projects over the parliament 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.
In a speech on Wednesday in Greater Manchester, Reeves will announce £15.6bn of funding for transport schemes in England’s city regions between 2027-28 and 2031-32.
They will include £2.4bn for a metro extension linking Birmingham city centre with a new “sports quarter”, as part of plans to regenerate one of the city’s most deprived areas around Birmingham City Football Club.
There will be £2.1bn over the same period for a mass transit system in West Yorkshire, £2.5bn for transport schemes in Greater Manchester and £1.5bn for projects in South Yorkshire.
Other schemes include £2bn of funding in the East Midlands, including improving connections between Derby and Nottingham, and £1.8bn for the North East, including a metro extension linking Newcastle and Sunderland.
Heidi Alexander, transport secretary, said: “For too long, people in the north and Midlands have been locked out of the investment they deserve.”
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.
