Rachel Reeves has announced £15bn for trams, trains, and buses outside London as part of a £113bn capital investment programme over the remainder of the parliament. The Chancellor is positioning the spending as a centrepiece of the government's economic narrative, aiming to convince Labour MPs that the spending review will not herald a return to austerity.
The investment, which covers transport, homes, and energy, is intended to boost productivity in the Midlands and the North. Reeves has confirmed that Treasury investment rules will be rewritten to give extra weight to schemes that increase productivity in these regions, marking a shift away from the dominance of London and the South East.
Three Whitehall departments—the Home Office, the Department for Energy Security and Net Zero, and the Ministry of Housing, Communities and Local Government—have yet to agree their multi-year budgets with the Treasury. The Home Secretary, Yvette Cooper, is said to be resisting what she sees as an impossible settlement.
The Chancellor's allies argue that departments will receive £300bn more than the Conservatives had planned, including £190bn more on day-to-day spending. However, the Institute for Fiscal Studies warns of 'unavoidably tough decisions' due to pressures from NHS and defence funding.
In a speech in Greater Manchester, Reeves is expected to say the plan represents a 'step change' in regional investment, ensuring that every region gets a fair hearing. She will argue that growth has been concentrated in too few places, leaving wide gaps between regions and between cities and towns.
