finance

England’s big city regions to receive £7bn Budget injection for transport


England’s big city regions are to share a pot of nearly £7bn for transport improvements as Rishi Sunak seeks to flesh out the government’s “levelling up” ambitions ahead of next week’s Budget.

The UK chancellor will commit £5.7bn for transport schemes across the seven mayoral city regions — mostly in the Midlands and northern England, an increase on the 2019 promise to create a £4bn fund for the city regions.

The schemes include tram improvements in Greater Manchester, West Midlands and South Yorkshire, new bus corridors in Manchester, new stations in Liverpool, upgrades to Darlington and Middlesbrough stations and improvements to the A4 near Bristol.

The chancellor will also use his Budget and multiyear spending review to add a further £1.2bn to boost bus services outside London with faster journeys, simplified fares and more services.

The announcement is the latest demonstration of how prime minister Boris Johnson’s administration has — since Brexit — sought to refocus Conservative attention away from the party’s traditional south-east heartlands.

Sunak said: “There is no reason why somebody working in the north and midlands should have to wait several times longer for their bus or train to arrive in the morning compared to a commuter in the capital.”

Andy Burnham, Labour mayor of Greater Manchester, will receive £1.07bn — the figure he asked for — towards upgrades. Burnham has contrasted London’s cap of £4.65 on unlimited daily bus travel with the £4 spent on a single journey on some routes in his region.

Andy Street, the Tory mayor of the West Midlands, has fallen short of his £1.7bn demand with a £1bn allocation.

Ministers will shortly announce a decision on the future of the High Speed 2 rail line from London to northern England and the upgrade of the trans-Pennine line from Leeds to Manchester, dubbed HS3.

Under HS3 proposals put forward by the transport department, the existing line from Leeds to Manchester would be electrified and widened with a new spur to Bradford — a cheaper option than building an entirely new line.

At the same time the eastern leg of HS2 is expected to be curtailed to save money — stopping in Nottinghamshire rather than running from Birmingham to Leeds. Building the entire Leeds leg could have cost £40bn.

However, the final decision on both HS2 and HS3 is still the subject of wrangling between the Treasury and Downing Street; Johnson is a longstanding enthusiast for big transport projects.

Meanwhile, Johnson and Sunak have agreed to shrink their ambitions to boost the UK’s public spending on research and development to £22bn by 2024/25, to the anger of the science sector.

Government officials said they expected Sunak to announce plans to increase spending from £14.9bn to £20bn by the end of the parliament. The chancellor met leaders of Britain’s big science and engineering academies on Friday to try assuage their anger.

Sunak is also set to disappoint calls from business leaders by yet again delaying the fundamental shake-up of business rates promised in the Conservative party’s 2019 manifesto.

But he is considering plans to end “perverse incentives” in the business rates system — such as the higher rates charged on companies that put solar panels on their roofs. Companies have long complained that the system penalises those who invest to improve buildings or amenities.

Officials confirmed that an exemption for green technology and machinery was being considered but said no final decision had been made.

The next reassessment of rateable values is in 2023 and, until then, businesses will pay rates based on annual rental values in 2015 when some rents were higher.

Sunak is expected to back more frequent revaluations to occur every three years instead of five and could provide more relief for high street retailers. But these tweaks would fall short of the 2019 Tory manifesto promise of a major review.

The chancellor will also extend a recovery loan scheme by six months, according to people briefed on the plans, albeit on slightly tweaked terms that will make the scheme less attractive. Ministers are expected to cut the maximum facility provided from £10m to £2m, however, and the level of the guarantee from 80 per cent to 70 per cent.



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