Sunak announces £4bn cross-government Levelling Up Fund as Green Book gets rewritten

Scheme to support "infrastructure of everyday life" – but chancellor indicates projects must have MPs' backing
Photo: Yui Mok/PA Wire/PA Images

By Richard Johnstone

25 Nov 2020

The chancellor, Rishi Sunak, has set out plans for a £4bn fund to support local infrastructure projects across England in the first clear indication of the government’s plans to level up across the country as part of the coronavirus recovery.

The programme will be run jointly by the Treasury, the Ministry for Housing, Communities and Local Government, and the Department for Transport. It will allow local areas to bid to fund projects such as new roads, upgraded railway stations or new libraries, museums and galleries, or high street improvements.

“This government is funding the things people want and places need,” Sunak said.

Further details will be set out in the new year, but the Spending Review allocated £600m for the first round of the scheme in 2021-22, and Sunak said that the projects must be able to be completed before the next election. They will also need they must “local support, including from their member of parliament”.

Bye the Green Book?

The announcement of the new funding scheme comes as it was also announced that the government had completed its review of the Green Book guidance that determines the cost-benefit ratio of infrastructure projects.

The new Green Book will “ensure that project appraisals properly analyse how proposals deliver the government’s key priorities, including levelling up, and how they will impact different places”.

A review concluded that that current methodology, which often favours projects in London and the southeast of England as they have higher economic performance so are seen to be able to benefit more from extra investment, “often fails to properly consider how a proposal will deliver the government’s policy ambitions, including levelling up”.

The review added: “This leads to appraisals being focused on a benefit-cost ratio (BCR) that does not fully reflect social policy objectives or give ministers the information they need about where costs and benefits fall.”

As a result, the Treasury said it would “end the dominance” of benefit-cost ratios, and instead base decision on “a comprehensive picture of cost and benefits”, including impacts that are difficult to monetise.

The Spending Review document added: “In particular, options will be assessed first and foremost based on whether they deliver relevant policy objectives.

"Any option which fails to do so cannot be considered value for money and will not progress to shortlisting stage.”

In addition, the guidance will also be changed “so it will no longer be acceptable for proposals to be place blind". Instead, project business cases should be developed to purposely align with relevant local strategies and major interventions in the area.

“These changes will mean that appraisals and advice to ministers should include much better analysis on how options will deliver their policy goals, as well as which parts of the country look to gain most from them, supporting better-informed decisions,” the Treasury said.

“These updates will feed into future spending reviews and HM Treasury will also roll out a tailored programme of training across departments to ensure that the new Green Book guidance is fully embedded in future appraisals.”

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