Regional Growth

Thursday 5th June 2025 Lords Chamber

Statement

The following Statement was made in the House of Commons on Wednesday 4 June.

“With permission, I shall update the House on the Government’s work to boost growth across the United Kingdom.

As the Prime Minister set out in the plan for change, economic growth is the No. 1 mission of this Government. It is key to achieving the Government’s goals: higher wages for working people; delivering economic and national security; and investing in our public services. We are already making progress. The most recent figures show that the United Kingdom was the fastest growing economy of any G7 country in the first quarter of the year and that real wages have risen more since July 2024 than over the first 10 years of the previous Conservative Government. But we are keenly aware that this progress must be widely felt in every part of the country. As such, our plan for regional growth will be hardwired into the spending review and infrastructure strategy, which will be set out in more detail in the coming weeks. This investment will be targeted squarely at the renewal of Britain and fixed on the priorities of working people, delivering on the promise of change and improving lives and communities across the country.

This morning, the Chancellor set out her next steps for nationwide growth in a series of speeches across the north and the Midlands, and I am pleased to update the House on those announcements now. A key part of the Government’s growth mission is the view that growth relies on dynamic, interconnected city regions, creating clusters of activity where people can get around, communicate, share ideas, commute, find good work and earn wages that flow back into strong local economies. As most Members know, the majority of our city regions have poor public transport systems, holding back growth and improvements to air quality and making it harder to get around. Stronger transport links are therefore crucial. They create opportunities for individuals to access a wider pool of jobs, for employers to access a wider labour market, and for businesses to expand the market for their goods and services.

If we were to increase the productivity of our largest city regions outside London just to match the national average, it would grow the economy by £86 billion. So I am pleased to say that this Government are making the biggest investment in intra-city transport connectivity that this country has ever seen. The spending review will allocate funding for ambitious local transport programmes across England, including the new transport for city regions fund launched by the Government today. This will give nine city region mayors a share of £15.6 billion in long-term transport for city region settlements running until 2032. The benefits and opportunities will be felt in the cities and towns across these combined authorities and by those who commute to work from outside those city regions.

The previous Government said that they would do some of this but, as was always the case, they never put the money aside to pay for it. As a result of our reforms to the fiscal rules and decisions to increase investment in the 2024 Autumn Budget, this Labour Government are delivering.

The funding announced today will mean that the Mayor of West Yorkshire can now fully commit to delivering the West Yorkshire mass transit system, which will be fully integrated with cycling, walking, bus and rail, making journeys quicker, more accessible and more reliable across the region. The Mayor of the West Midlands can extend the metro from Birmingham city centre to the new sports quarter, unlocking more than £3 billion of private investment, and bringing benefits and opportunities to those living in the constituency of my right honourable friend the Member for Birmingham Ladywood, Shabana Mahmood, and all who travel there.

It will mean that the Mayor of Greater Manchester can grow and transform the Metrolink tram network, building new tram stocks in Bury, Manchester and Oldham, which will help drive up living standards for the constituents of my honourable friends the Members for Bury North, Mr Frith, for Bury South, Christian Wakeford, and for Oldham East and Saddleworth, Debbie Abrahams, and for others in the north-west region. The Mayor of Liverpool city region can deliver three new rapid bus routes linking up the city centre, John Lennon airport, the new Everton stadium on Bramley-Moore dock, and new homes built on the Central Docks redevelopment and Anfield.

The Mayor of the North East will now be able to extend the Tyne and Wear Metro, linking Washington with Newcastle and Sunderland, connecting those living in the constituency of my honourable friend the Member for Washington and Gateshead South, Mrs Hodgson, to new jobs and opportunities. I pay particular tribute to my honourable friend, who has campaigned for this project for years and years, and it is now being delivered by a Labour Government.

This investment will also mean that the Mayor of South Yorkshire can renew the existing and now publicly owned Supertram network with track replacements, overhead line maintenance, and rolling stock renewal, yielding a fleet of new vehicles by 2032, linking jobs and homes in Sheffield and the constituency of my honourable friend the Member for Rotherham, Sarah Champion.

We are backing the Mayor of the West of England’s plans for mass transit development across the region, with improved rail infrastructure to help unlock more services between Brabazon and Bristol city centre, meaning shorter journey times to Bristol Temple Meads across the wider area and providing greater opportunities for those in the constituency of my honourable friend the Member for Filton and Bradley Stoke, Claire Hazelgrove, and—declaring my own interest—in my own.

After years of the Mayor of Tees Valley trying to persuade his Conservative colleagues to fund these important projects, I am delighted to confirm today that this Labour Government are now backing the region to invest in, for example, the Middlesborough station in the constituency of my honourable friend the Member for Middlesbrough and Thornaby East, Andy McDonald, unblocking local networks and increasing capacity on local lines. I pay particular thanks to my honourable friends the Members in the Teesside region who have lobbied hard to see this investment in their region—now being delivered by a Labour Government.

The Mayor of the East Midlands can now forge the Trent Arc, linking Derby and Nottingham to create tens of thousands of new jobs and homes, connecting Infinity Park investment zone and the east Midlands freeport with sites including Ratcliffe-on-Soar clean energy and advanced manufacturing and the East Midlands Intermodal Park—home of Toyota in the region—along the Trent Arc corridor.

This funding is substantial, marking a 2.4 times real-terms increase in spending on city region connectivity, funding the priorities that matter to hard-working people across the country. These announcements were made possible today only because at the Autumn Budget 2024 the Chancellor took the necessary action to reform the fiscal rules to improve stability after years of chaos from the Conservative party, and to unlock investment. This means the Government can now provide greater investment in Britain’s economic revival as, for the first time, the Treasury takes account of the value of financial assets and not just the costs of investment. That has enabled us to increase investment by over £113 billion more than the previous Conservative Government, while keeping debt on a sustainable path—made possible only by the credibility of our fiscal rules, which require day-to-day spending to be funded with revenue.

It is more important than ever to have a robust fiscal framework. I am pleased to note that the Office for Budget Responsibility confirmed at the Spring Statement that the Government will meet their stability and investment rules two years ahead of schedule. In addition to her announcements today regarding transport for city region settlements, the Chancellor will set out further detail on this allocation of additional funding at next week’s spending review.

In January, the Chancellor announced a review of the Green Book, the Government guidance on appraising options for investment. Since then, we have consulted extensively with stakeholders from across the country, considering potential problems with the Green Book guidance itself and how the guidance is being applied in practice. I thank and pay tribute to many honourable Members across the House for engaging on this important issue.

We will publish the full conclusions of the review next week. It will mark a new approach to government decision-making that puts an end to siloed Whitehall thinking and takes account of the reinforcing economic effects of infrastructure, housing, skills and jobs, to ensure that investment takes place in every part of the country.

These announcements reflect just a fraction of our plans to supercharge growth across the United Kingdom. We are focused on investing across all parts of the country to boost prosperity and deliver the change the British people voted for at last year’s election, and there is more to come. The spending review, which we will publish next week, will set out in further detail how an active Government will continue to deliver growth, empowering all regions and nations of the UK to reach their full potential and making working people across the country better off, no matter where they choose to live and work.

Unlike the Conservatives, who will tell us that they would have delivered on their false promises after 14 years of failing to do so, this Labour Government, in our first year in office, are delivering: a country that people will see is being set up for success that they can take part in. That is the change we promised, and that is the change this Labour Government are delivering. I commend this Statement to the House”.

11:50

[Baroness Neville-Rolfe (Con)]

My Lords, the Statement given in the other place yesterday made many references to the benefits of growth, and the Chief Secretary to the Treasury could hardly contain his excitement when he said that increases in regional productivity could grow the economy significantly. We on this side of the House would of course welcome the prospect of economic growth. However, although the Statement mentioned “growth” nine times, there was little to no detail on how these proposals would in fact boost our economy.

One vital question is whether this level of investment—if it is in fact new money—will require an increase in taxation, given that national debt is already at around 100% of GDP. As we know from the country’s experiences with inheritance tax and the NICs hike, tax rises are bad for growth and bad for our economy. I hope that the Minister can provide the House with some clarity on this question. Can he confirm to the House what the net figure is for the projected cumulative impact of this policy on British economic growth by the end of the Parliament? Can he assure the House that this policy will not be met through any new or increased taxes?

This Statement also gives me a sense of déjà vu, because the measures announced are incredibly similar in scale and form to the funding announcements made by the previous Government under the City Region Sustainable Transport Settlements in 2023. In 2023, we promised £2.64 billion for the West Midlands, and the Government have announced £2.4 billion for the West Midlands. We promised £2.1 billion for West Yorkshire; now, the Government have announced £2.1 billion. We promised £2.5 billion for Greater Manchester; they have announced £2.5 billion. Indeed, much of this investment touted by the Government appears to have been recycled—money already announced in different forms under previous schemes and now repackaged. This needs careful examination. Perhaps the Minister could help us here with an honest assessment.

The Government quote the Green Book, which they are revising to give more opportunity for projects outside the south-east—so a change in the way value for money is approached. Given that this has already been briefed to the media, what are the key features here and have the projects announced yesterday been assessed on the old or the new basis? How will the rules be honed to avoid Whitehall-inspired or ministerially-inspired white elephants?

I had the honour of chairing the Built Environment Committee, with many from across the House, and leading its work in 2022 on Public Transport in Towns and Cities. We found that nearly two-thirds of journeys on public transport were by bus. What do the Government’s plans do for bus funding? I am less interested today in the rapid bus routes planned for Liverpool than in basic bus services that so many people take to work, especially when they live outside our cities and commute. The Government have increased the maximum £2 fare that we introduced and have not guaranteed its long-term future.

The committee also found that light rail schemes—basically, trams—are very expensive but that very light rail systems such as that in Coventry, and bus rapid transit schemes, had more potential and needed to be assessed and compared. What have the Government concluded about the balance here, and how is that reflected in yesterday’s package?

We support infrastructure investment when it is targeted, timely and impactful. But what we heard from the Chancellor and Chief Secretary yesterday was less of a plan and more of a press release. The funding, spread over nearly a decade, will not begin in earnest until 2027. That is two years from now before the money leaves the Treasury. For communities in the Midlands and the north, this will sound like delay dressed up as action.

Can the Minister confirm when we will see the effect of this policy reflected in regional and national growth and productivity rates? Can he assure the House that businesses in the areas identified will see a tangible improvement in their day-to-day operations as a result of these spending decisions? After all, it is business, not government, that is more productive and the main driver of growth.

The noble Lord and I agree on the importance of productivity growth. However, to achieve the £86 billion productivity improvement in cities cited in the Statement requires much more than this largely welcome transport investment. We need a revolution in skills, innovation, digitalisation and public sector efficiency, and to solve the problem of uncompetitive electricity prices crippling our industries, especially in the very regions we are talking about today.

Finally, I must raise a note of caution on the fiscal front. At a time of considerable pressure on the public finances, we must be clear-eyed about priorities. A commitment of this scale, without clear delivery mechanisms or clarity on the projected economic returns, risks becoming a drain rather than a driver. Transport investment must support productivity, growth, and value for money. It must not become an uncosted political gesture, reliant on anti-growth decisions such as tax hikes. It is incumbent on the Government to be responsible in the steps that they take, so I look forward to the noble Lord’s answers today and to next week’s spending review, when we will return to some of these issues.

[Baroness Pidgeon (LD)]

The Liberal Democrat Benches fully support measures to grow our economy across every nation and every region. We therefore welcome this Statement detailing planned investment in public transport and infrastructure. It is good to see not just plans but the money set aside for some city regions, giving long-term transport financial settlements. Frankly, that is the only sensible way to ensure investment in transport infrastructure, rather than the constant stop-start begging-bowl approach we saw with the previous Government, which benefits no one and delivers nothing. For too long, communities have heard promises only, to be left with phantom transport networks, so investment in transport infrastructure is vital if we are to grow our economy and create access to jobs across the country.

In particular, we are very pleased to see the Metrolink to Stockport in this announcement, which is testimony to the hard work of the local Liberal Democrats, who have been campaigning and working on this issue for many years—indeed, long before the mayor and the combined authority were created. However, we have a number of questions. It seems that areas without mayors are being left behind or ignored. Where is the plan and money for rural areas? There are parts of the south-west, for example, which would benefit hugely from transport infrastructure investment, yet this area has been ignored in this Statement. It feels as though Bristol is as far west as the Government can see.

Whether it is Cumbria, Shropshire, Norfolk, Devon or Cornwall, there is nothing in this Statement for them, so what plans do the Government have for a rural growth strategy? What funding is planned for our railways as they come under public ownership? There is a desperate need for major investment across the network to enable more frequent trains to serve our communities. Will there be a railway investment plan? Will the Mayor of London and Transport for London be allocated further funding to maintain and grow the capital’s transport system, creating jobs across the country?

The cost of fares is a real barrier to many people. What plans are there to reduce fares—in particular, to reinstate the £2 bus fare cap—and to reform rail fares to make them affordable for passengers? Alongside the investment in infrastructure, there is the challenge of the skills and workforce issues. What plans do the Government have to ensure that we have the skilled and trained workforce to build this transport infrastructure, including fixing the apprenticeship levy? This is a welcome first step, but key questions need to be answered to ensure that every area can grow and prosper.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am very grateful to both noble Baronesses, Lady Neville-Rolfe and Lady Pidgeon, for their questions, and I welcome the noble Baroness, Lady Pidgeon, to her place and look forward to speaking with her in many more of these debates.

The noble Baroness, Lady Neville-Rolfe, asked a number of questions. She started by asking about growth. I noticed that she did not mention that, in this quarter, the UK is the fastest-growing economy in the G7. I noticed that she did not mention that our growth forecasts have just been upgraded by the IMF. I noticed that she did not mention that, in many business surveys, business confidence is now at its highest level for many years. I hope that, when she talks about growth, she will always give a rounded picture of where we are on growth.

She asked whether these measures will contribute to regional growth, and yes, of course they will: that is the whole point of them. For too long, we have relied on just one part of the country to generate economic growth. We need to make sure that more parts of our country are contributing to growth and more people throughout our country are feeling the benefits of that growth. That is absolutely why we are doing what we are. It is why we started with connectivity: because we know that connecting city regions is incredibly important, enabling more people to travel to work, connecting labour markets and connecting businesses to more places so that they can sell more goods to more people. That is absolutely central to what we set out yesterday. The answer to the question, “Will this contribute to growth?” is: yes it absolutely will. We saw in the Spring Statement the OBR, for example, scoring for the first time some of our growth measures, and of course we hope that it will continue to score our growth measures going forward.

She asked: is this new money? Absolutely, yes—yesterday, we announced £15 billion of new money. It is the biggest ever investment by any British Government in our regional transport network. As a result of the fiscal rules and the difficult decisions that we have taken, we are in the spending review increasing the overall amount of spending by £300 billion: £190 billion on day-to-day spending and an increase of £113 billion on capital spending. I noticed that the noble Baroness, Lady Neville-Rolfe, welcomed—slightly half-heartedly—what we announced yesterday. It is notable that she welcomed the additional spending, but she has at no point welcomed any of the difficult measures we have taken to raise that money so that we can spend it on the things that she is now welcoming. I think that her shadow Chancellor is today making a speech where he is seeking to distance himself from the Liz Truss approach from the previous Parliament. Yet it seems to me that the party opposite is repeating exactly the same mistakes of the Liz Truss mini-Budget of spending money that it does not have. I think that is a huge risk going forward. As I say, she has welcomed this spending, but she has opposed every single measure we have taken to raise the money to fund it. She asks: will this policy require any additional taxes? No, because we have already raised the taxes in the last Budget—£40 billion—to enable us to spend this money for the rest of this Parliament. So yes, these measures will be met within the envelope that was set at the last Budget.

The noble Baroness said that these are the same measures as the previous Government announced. She kept using the phrase, “We promised”. I think that is a really important phrase because, yes, the previous Government did promise many things, but they did not put a single penny of funding behind any of the promises made. The big difference between what we are doing now, what the Chancellor announced yesterday, and what the previous Government announced, was that they made lots and lots of promises that they never funded—not with a single penny of funding. She will have heard me refer to the £22 billion black hole in the public finances. That is exactly why that black hole occurred. What we announced yesterday was real funding for real measures going forward. That is the big, fundamental difference. She asked for an honest assessment, and I think I would call for some honesty from her too that the previous Government did not fund any of those promises.

She asked about the Green Book. We have set out that the Green Book was used by previous Governments against regional authorities and local mayors as a reason not to invest outside London and the south-east. We have changed that methodology. We will set out in the spending review next week the full details of that review, and I look forward to discussing the full details of that with her.

She said that funding would not be seen for two years from now. Of course, there was no funding seen under the last Government at all, so of course we have to start somewhere and we have to get the money out of the door—she is absolutely right. But spades will be in the ground in this Parliament, and we absolutely confirm that.

She asked: will we see improvements for business? Yes, it is absolutely the purpose of this announcement to connect businesses to more areas. It is why local transport networks are so vital and why we have started where we are. She talked about the fiscal front, and I completely agree with her. Of course there are increasing pressures, but that is why I say to her that we must not make promises that we cannot afford. The previous Government did exactly that; we will not make that mistake.

I am very grateful to the noble Baroness, Lady Pidgeon, for her welcome for the long-term nature of these announcements, and it is obviously great that national government is working with local government and local government leaders to deliver on these promises. She called it a welcome first step, and I would agree exactly with that sentiment. We were very clear about what we were and were not announcing yesterday. Yesterday, we were announcing the connectivity of city regions, so of course this focused on certain city regions. Next week, we will set out in the spending review the entire regional plan for growth: for the rest of England, Scotland, Wales and Northern Ireland. That is what we will do, but yesterday we were talking purely about the connectivity of city regions, and we were putting the transport connectivity first, because we know that that is the essential underpinning for so much else in our growth strategy.

She touched on a number of other things that are important to growth. She talked about skills, for example. I completely agree with her when it comes to skills. We will be setting out in the spending review, and then in the industrial strategy in the weeks following the spending review, the measures that we are taking. She talked about having the workforce to build this transport infrastructure. Absolutely: I completely agree with her on that point. She asked about funding for railways, the rest of the country and regional plans, and about the Mayor of London, et cetera. All those questions will be addressed in the spending review next week, and I look forward to discussing that with her and other noble Lords next week.

[Baroness Neville-Rolfe (Con)]

Will that include buses?

[Lord Livermore (Lab)]

It will include buses too, of course.

12:07

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I very much welcome the Statement on connectivity across England, and I welcome the noble Lord’s commentary in relation to the spending review next week, particularly in relation to the connectivity of the different parts of the United Kingdom. He will know that I have mentioned the report of the noble Lord, Lord Hendy, on union connectivity many times, and I urge the Minister and his colleagues to look at that report again, particularly in relation to the A75 in Scotland, which is very important for people and businesses travelling from Northern Ireland to England, because that road really needs an upgrade. I commend the Government for taking this initiative. I really believe in capital investment leading to economic growth, and I think that connectivity will be very much helped by that. I urge him to look at that connectivity review and to link up the rest of the Kingdom as well.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question and the points that she makes. I think we would agree with a lot of what she says. She is supporting the importance of connectivity underlying much of our growth mission. That is obviously what we were starting to set out yesterday—as I say, just in the city regions for now, but next week, in the spending review, in the rest of the United Kingdom. I cannot comment on the specific road that she mentions ahead of that spending review, but of course I will take away what she says about that report and very much support what she says about connectivity.

[Lord Wigley (PC)]

Does the Minister accept that a key step in overcoming regional economic disparities is the mobilisation of the full labour force and, in particular, bringing into worthwhile employment young people who are fit to work and not in full-time education or training? What progress has been made to overcome regional disparities in that regard?

[Lord Livermore (Lab)]

I very much agree with the noble Lord in what he says about bringing people in. We have far too many people inactive in our labour market. I think we are the only country in the G7 where inactivity rates have not returned to where they were prior to the pandemic, for example. At a time when, as the noble Baroness, Lady Pigeon, mentioned, we need the workforce there to build this infrastructure, there are far too many people who are currently inactive, and it is a huge waste of potential. We have started, with the welfare reforms that we have set out, to get more people back into the labour market. There will be more detail in the spending review next week, or perhaps following the spending review, on the settlement that the Department for Education and the Department for Work and Pensions will be receiving to ensure that we get more of those people who are not in education or training back into the workforce.

[Lord Mohammed of Tinsley (LD)]

My Lords, like my noble friend Lady Pidgeon I support the announcement from the Government. I also support her call for the reinstatement of the £2 bus fare cap.

I listened with interest to the Minister’s comment about connectivity in city regions. I want to press him regarding South Yorkshire. I welcome the tram renewal. However, in addition to tram renewals, did the ask from the regional mayor include tram extensions? The Supertram system in Sheffield has been in place since the early 1990s, albeit that a small extension from Meadowhall in Sheffield to Rotherham was done during the coalition years. Was a tram extension asked for?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his support for what we have set out and for connectivity in general. We announced £1.5 billion for South Yorkshire, to support the reopening of Doncaster Airport and to renew the existing and now publicly controlled Supertram network with track replacements, overhead line maintenance, rolling stock renewal and a full fleet of new vehicles by 2032, linking jobs and homes in Sheffield and Rotherham. It was also to reform South Yorkshire’s buses—the noble Baroness, Lady Neville-Rolfe, is keen on buses—with franchise buses operating in Sheffield, Doncaster and Rotherham by 2027 and across South Yorkshire by 2029.

[Lord Moylan (Con)]

My Lords, I am curious about the relationship between the timing of this announcement and the review of the Green Book. The figures announced today are practically the same as those promised by the Conservative Government a year ago. We are expecting from the Government a review of the Green Book which is meant to tilt investment further towards the city regions outside London. The Chief Secretary to the Treasury confirmed in his Statement yesterday that the Green Book review will be published next week. Why have the Government rushed out these figures, which are clearly based on the existing Green Book and the Conservatives’ financial methodology? Would the city regions not have benefited more had the Chief Secretary waited until after next week’s announcement, when the new Green Book—we do not know what it will contain yet—is in place?

[Lord Livermore (Lab)]

No, that is not the case at all. The noble Lord refers to promises made by the previous Government, which the noble Baroness, Lady Neville-Rolfe, also referred to. Promises were made. Let us be clear: not a single penny was allocated by the previous Government to a single promise that they made. The noble Lord can compare what this Government are doing with what the previous Government did, but this Government are putting money towards those announcements.

The noble Lord then said that announcements were—in his bizarre phrase—“rushed out”. Making announcements is not rushing anything out. It is setting out very clearly what our policy is for the connectivity of the city regions. We will publish the review of the Green Book next week. That will make sure that, in future, additional investment is not biased towards any one region but that the entirety of the country is considered when it comes to those announcements. That makes perfect sense. I do not recognise the analysis that the noble Lord is putting forward.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I welcome the Government’s announcements in relation to regional growth. As the sometime author of the Green Book, I welcome the direction of travel in terms of investment appraisal. However, inevitably, resources are finite. Can the Financial Secretary confirm that the Government are prioritising those projects with the greatest economic return? Does he agree that the private sector also has a critical role in delivering regional growth? Can he reaffirm the Government’s commitment to sound public finances, the better to bear down on the cost of borrowing?

[Lord Livermore (Lab)]

I agree with the noble Lord’s points. He asks about the Green Book. He has much more experience in this matter than I do. We have set out—and I hope that he agrees—that for too long the guidance in the Green Book has been biased against certain parts of the country. We want to address that. On whether we will prioritise the spending on where it has the greatest return, yes, this is key to the methodology that the Green Book sets out. The Green Book reinforced investment in areas that were already successful. It did not necessarily enable investment in areas where there was a high degree of potential. That is what we want to do. By investing in areas of high potential, there will be huge returns. We have already set this out. There could be a potential increase of about 3% of GVA if we can get the city regions up to the average productivity of the country, as the noble Baroness, Lady Neville-Rolfe, said. That is the intention and why we are doing what we are doing.

The noble Lord talked about the importance of fiscal responsibility. He will know that this Government inherited a £22 billion black hole in the public finances. Restoring fiscal responsibility is the central driving purpose of the stability pillar of our growth mission. We have set out very clear fiscal rules that require no borrowing for day-to-day spending, unlike the previous Government, who had that £22 billion black hole in their day-to-day spending. We have repaired that. At the first opportunity, when the fiscal rules were tested at the Spring Statement, we repaired the headroom against the fiscal rules in full to what it was before. We have set out very clear fiscal rules. We will stick to them, and everything that we set out in the spending review next week will be shown to be fully funded and fully in line with the fiscal rules.

[Lord Wallace of Saltaire (LD)]

My Lords, I welcome the proposals. I remind the Minister that the Leeds tram scheme was cancelled by the last Labour Government in 2009, so it is very good to see it coming back 26 years later.

I note that the Statement says that modern growth

“relies on dynamic, interconnected city regions”.

I live on the outskirts of Bradford, the largest city in Britain without a mainline station. I am conscious that the lack of a decent trans-Pennine link and the overcrowding of the existing rail links between Leeds and Manchester is a huge problem for interconnection between three potentially vital regions of Britain—West Yorkshire, South Yorkshire and Greater Manchester. I remind the Minister that a new trans-Pennine rail link, Northern Powerhouse Rail, was talked about, planned and proposed, on and off, throughout the last Government. We need to make something which will be transformative for the entire north of England.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his support and for what he says. He knows much more about that region than I do. He will know that in the previous Budget, we funded the trans-Pennine upgrade for the work that was under way. We gave a further £2.1 billion investment for West Yorkshire yesterday, which will deliver for the West Yorkshire mass transit system, linking up Bradford, Kirklees, Calderdale, Wakefield, Pudsey and Leeds. I hope that goes some way towards what he is asking for. There will be further transport announcements in the spending review next week. I look forward to debating those then.

[Lord Bach (Lab)]

My Lords, I must apologise to the House and my noble friend the Minister for being a couple of minutes late for the start of the Statement. I hope that the House will forgive me; it is the first time that I have done that.

I want to ask the Minister about the east Midlands. We have felt very left out over many years in that important part of England, but I was delighted by yesterday’s announcement as it affects transport links between the two great cities of Nottingham and Derby. That is a great plus which we are very pleased about. Now for my slight gripe: I spring from Leicestershire, and we are feeling slightly left out, not from yesterday’s announcements but because, generally, Governments, and particularly the previous one, have failed to do anything to help in this way in the east Midlands and around Leicester in particular. Can the Minister and his colleagues consider that when future decisions are made?

[Lord Livermore (Lab)]

I am very grateful to my noble friend. Even though he was late, I was very happy for him to contribute when he was welcoming what we have done, for which I am grateful; I was less keen once he started with his gripe. We have pledged £2 billion of additional investment in the East Midlands to develop the Trent Arc, linking Derby and Nottingham to create tens of thousands of new jobs and homes, and to connect Infinity Park Investment zone and the East Midlands Freeport with sites including Ratcliffe-on-Soar clean energy and advanced manufacturing and East Midlands Intermodal Park—home of Toyota in the region. I absolutely hear what he says about Leicester; I will take that back and hopefully will have more good news for him in the spending review next week.

[Baroness Coffey (Con)]

My Lords, I am conscious that some of these announcements sound familiar—that is why I welcome them—but I was concerned that the Ely Junction upgrade was not mentioned. I hope for better news later next week. The Minister referred to the Green Book. I am very interested in this, because it was changed in December 2020 specifically to make sure that the Government’s strategic priorities—of which growth around the country was one—meant that a project’s BCR could be lower than for other projects, but that it would still be awarded and could go ahead.

Based on what the Minister has said, I am just wondering what further changes are going to be made in the Green Book on the back of the changes that have already happened, which have meant that projects could be deployed—that is why so many of these projects were announced two years ago. I would be grateful if he could explain this further. He talks about black holes and the like; of course, he knows that the OBR does not agree with that assessment. I would also be grateful if he could clarify the spending announcement, because he said that this would be new money. Is that on top of the £36 billion announced two years ago for many of the projects that were re-announced yesterday?

[Lord Livermore (Lab)]

The noble Baroness has asked a number of questions. When she stood up, I was hoping she was going to defend the Liz Truss mini-Budget that her party is trying to distance itself from today. I was disappointed that she did not do that. She did try to defend the £22 billion black hole, which is almost as enjoyable as defending the Liz Truss mini-Budget, and she will know that that is what we inherited.

The noble Baroness talked about re-announcements made yesterday. I will just make this point again: they are not re-announcements if actual money is put behind them. The previous Government announced many things and made lots of promises—the noble Baroness, Lady Neville-Rolfe, used the word “promises” lots of times—but they did not put a single penny behind any of those things. Not one penny or pound of any of those announcements was ever funded. We are now funding those announcements, so it is a very different situation.

The noble Baroness asked about the Green Book. As she knows, the Treasury Green Book sets out the guidance for public servants on how to assess the value for money of Government projects. We have heard from many regional mayors that previous Governments wielded the Green Book against them as an excuse to deny important investment in their areas. That is why in January the Chancellor ordered a review of the Green Book and its use to make sure that this Government give every region a fair hearing on investment. The purpose of the review is to determine whether the Green Book is being used to provide Ministers with fair, objective and transparent advice on public investment across the country, including outside London and the south-east of England. We will publish the full conclusions of that review next week alongside the spending review.

[Baroness Butler-Sloss (CB)]

My Lords, having just heard what the Minister said about the various regions, may I ask him what, if anything, will happen further west than Bristol?

[Lord Livermore (Lab)]

I tried to address that in answer to the question from the noble Baroness, Lady Pidgeon. Yesterday we talked about interconnectivity within the city regions. We will be announcing the full regional transport plan and regional growth plan for the whole of the country—England, Scotland, Wales and Northern Ireland—next week in the spending review.

[Lord Wood of Anfield (Lab)]

My Lords, one way you can tell that I am a Treasury nerd is that I am really looking forward to the Green Book review being announced next week, and I welcome what my noble friend has said about that today. There are many problems with the way the Treasury has, historically, allocated money for long-term investment. One is the regional bias that we have discussed today, but another is that capital budgets are allocated for short periods with an incentive to spend them by the end of a three-year cycle, whether it is appropriate or not for the project. Does the Treasury still intend to move towards longer-term capital budgeting, and will we hear something about that next week in the spending review?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for his question and for his expertise in this matter. He is right on capital budgets, with which, historically, there have been two problems. The previous Government’s fiscal rules did not prioritise capital investment, so when they had holes in their day-to-day spending plans, they would raid the capital budget to top up them up. That is why we have seen the infrastructure of our country deteriorate over the past 14 years. This Government’s fiscal rules ensure that we do not cannibalise those investment budgets to fund day-to-day spending. That is incredibly important, and it is why we have this £113 billion of extra capital spending to announce in the spending review. My noble friend is also absolutely right about the short-term nature of those capital budgets. Yes, three years is probably too short a planning horizon, which is why we will be announcing five-year capital budgets in the spending review.

[Lord Evans of Rainow (Con)]

My Lords, I apologise for not being here at the beginning of this important Statement. I was on the Social Mobility Committee, which is related to regional growth. As an MP, I represented the new town of Runcorn, and I was interested to see that the proposed new towns are in Essex, Surrey, Oxfordshire, Cambridgeshire, Buckinghamshire, Bristol, Wiltshire, Warwickshire and North and South Yorkshire. There is no mention of the north-west or north-east of England. That is quite concerning when we look to achieving the growth we want to see in all the regions of our country. Can the Minister update the House on whether there are any proposals for new towns in the West Midlands and the north-west and north-east of England?

[Lord Livermore (Lab)]

I will have to check with my colleagues in MHCLG on that point, and I am more than happy to write to the noble Lord to answer it. On growth plans for the rest of England—and for Scotland, Wales and Northern Ireland—outside of the city regions that we announced yesterday, there will be much more to say in the spending review next week, but I will write to him on this point.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I welcome yesterday’s Statement. London is grinding to a halt while, hopefully, we are seeing the rest of the country improve its communications. The Mayor has recently made announcements about changes to the congestion charge. I know this is not my noble friend’s direct area of responsibility, but should we not review the possibility of extending the congestion charge to the western part of London? We are grinding to a halt, and it is time we did something fundamental to stop it.

[Lord Livermore (Lab)]

I think that may be a question for the Mayor of London.