Northern Powerhouse chiefs welcome 'rethink' on spending

According to reports, the changes would benefit the North and the Midlands, allowing more investment.

New Prime Minister Boris Johnson has publicly promised to equalise the economic balance between the North and the South.

The Treasury has not denied a report in The Times spelling out the possible rules change.

Lord Jim O’Neill, vice-chairman of the Northern Powerhouse Partnership, said: “I truly welcome a change to this approach, and hope it is for real. It would be a huge boost for many investments across the country, as well as throughout the Northern Powerhouse.

“I have long since believed, going back to the earliest discussions about devolution when I led the Cities Growth Commission and through to my time at Treasury, that the static, accounting-based approach of value for money in assessing investment projects does not make any sense.

“By definition, it adds to the attraction of projects in heavily-populated, economically-vibrant areas – usually London – and doesn’t allow for potential major productivity-enhancing projects elsewhere, including many in the North, and especially Northern Powerhouse Rail.”

Northern Powerhouse Partnership Director Henri Murison said: “The New Year promises to be a positive one for Northern Powerhouse if the Budget is as positive for economic rebalancing as this and other recent signs.

“It will be a testament to having those like Rishi Sunak MP as Chief Secretary at the Treasury, who understands the importance of closing the North-South divide both economically and politically for his own party’s long term prospects once Brexit and Labour’s leadership are less of a concern in voters’ minds.”

An announcement could be made in the Spring budget expected in February.