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Rachel Reeves has insisted she will not give “false hope” to supporters of building a new railway line north of Birmingham as a replacement for the canceled station of HS2.
The Chancellor said the government's transport focus was “connectivity within the north of England” rather than on the west coast main line.
“What I don’t want to do, and what the previous government (did), is give people false hope,” she told the Financial Times.
Reeves She spoke while promising to “link” regional growth to government targets, saying previous Conservative governments had failed to deliver on pledges to “level up” the economy.
The idea of a new railway link between Birmingham and Manchester was mooted by Labor mayors in both cities in September. It included a proposal to partially finance the project through the private sector to reduce the cost to the state.
Louise Hay, who was Transport Secretary at the time, said it was “entirely possible to explore” using such private funding, while government figures said Feasibility study will be launched.
Speaking as she traveled to meetings with Cabinet members and mayors in the north-east of England, Reeves insisted she was “not against…private investment in transport projects”.
She added that any proposals for transport in the north would be outlined in a comprehensive spending review, expected early next summer, but declined to specify what they might include.
Under the Conservatives from 2019 onwards, the government promised to “level up” the UK economy, which for many years had relied on higher productivity in the south-east of England.
Reeves said there was “nothing wrong” with the hypothesis, but “there was no real substance behind it.”
She said the changes she made to fiscal rules in the October Budget represented a “transformational” approach to investment decisions at the Treasury outside London, because new capital investments would now be counted as assets rather than just liabilities.
She also cited the National Wealth Fund, a £5.8bn fund that aims to make growth-focused capital investments, although this is less than the £7.3bn pledged at the election.
Reeves said the policies represent “two big bets” Labor is making in the economy outside London and the south-east.
She added that the National Wealth Fund's focus on energy projects was in itself a policy of “raising the bar.”
“The reality is that most of these (projects) are outside London and the south-east of the country,” she said, adding: “Whether it is batteries, ports, offshore wind, carbon capture or green hydrogen, these are the projects that matter.” Jobs and industries that will be located outside London, and indeed often in the North of England.
Reeves was speaking after Prime Minister Sir Keir Starmer set out six “milestones” as measures of the government’s progress on its wider goals, which are partly seen as tools through which Labour’s agenda can be imposed through Whitehall. The goals include raising living standards and building 1.5 million new homes.
It is seen by many in government as an indication of the Treasury's likely ministerial priorities in the Chancellor's upcoming spending review.
However, Reeves denied that areas such as transport and local government – which are not clearly visible on landmarks – might find it difficult to advocate for investment as a result.
“We think about things across government departments, not in a silo approach,” she said.
“You won't be able to build 1.5 million homes without more transport infrastructure that goes with it. You won't be able to raise real household disposable income unless people can get good jobs with decent wages. So transport is a key enabler.”
