The Treasury is planning to change how it allocates government cash to boost spending for the North and Midlands
Proposals set to appear in the Spring Budget will see government officials reassess how infrastructure and development spending is allocated.
This would lead to a shift in spending focus away from London and the home countries towards areas in the north of England and the Midlands, The Times reported.
The prime minister also plans to move civil servants outside London.
Spending decisions relating to areas such as infrastructure and scientific research are made based on Treasury Green Book guidance on how to appraise policies, programmes and projects that calculates economic return, known as gross value added (GVA).
But research by academics at Cambridge and Manchester universities has found that this policy had contributed to the “extreme” productivity divide between the UK’s regions.
Changes to these criteria could lead to a greater focus on closing the gap between London and other UK regions.
A senior Treasury source told The Times: “It is a very big thing. You have to think about the outcomes you want to achieve and work backwards.
“The traditional way to look at it is the simple GVA per head.
"There is a question of whether you change that to take into account wellbeing productivity discrepancies. It is an exciting debate and you’re going to hear a lot more about it in relation to the Budget.”
They added, however, that the government still planned to be “fiscally prudent” following the Conservatives' election win.
The FT also reported that Boris Johnson plans to shift civil servants out of London this year, as well as establishing new government agencies in other UK cities. Ministers have already pledged to place agencies created in response to Brexit outside London, and an unnamed ally of the prime minister said there was a “strong desire” to move civil service jobs out of the capital.
“We’re talking about some of the new bodies we want to establish, rather than simply moving existing Whitehall departments out of London,” they said. Other new organisations promised by the Tories include a “single enforcement body” to uphold what Johnson has claimed will be the highest employment standards in the world after Brexit.
The Cabinet Office’s revised Government Estates Strategy pledged to relocate “thousands” of public servants out of London by 2030. According to the FT, the chancellor, Sajid Javid is backing the initiative despite traditional Treasury reservations about the cost and disruption caused by machinery of government changes and the relocation of staff