Chancellor Rishi Sunak has been accused of bringing “pork barrel politics” to the UK with the launch of a £4bn scheme for local areas to bid for funding for projects.
Delivering his spending review to the House of Commons, Mr Sunak said the Levelling Up Fund would “fund the infrastructure of everyday life” as part of Boris Johnson’s agenda of improving standards of living in disadvantaged areas around the country.
But Labour said the scheme would see money handed out “on grounds of politics not need”, in an echo of the controversial £3.6bn Towns Fund, which saw grants go to Tory-held and target seats including communties secretary Robert Jenrick’s Newark.
A report by parliament’s Public Accounts Committee this month said it was “not convinced” by the way towns were selected, which had “fuelled accusations of political bias” and “risked the civil service's reputation for integrity and impartiality”.
Mr Sunak said that local areas will be able to bid for funds to build the facilities most wanted by local people, such as upgraded railway stations, transport improvements, better shopping streets, libraries, museums or galleries.
All projects to be funded must have “real impact”, be deliverable before the next election in 2024, and must command local support, including from their MP, said Mr Sunak.
The Treasury later clarified his comments to make clear that “local buy-in” could come from a “wide variety of sources” including local councils and mayoral authorities, and was not conditional on the MP’s backing.
Alongside the review, the chancellor published the government’s long-awaited National Infrastructure Strategy, setting out plans for faster broadband, new roads, cycle lanes, upgraded railways and more than 800 zero emission buses.
It will be supported by a new infrastructure bank – assuming many of the functions of the European Investment Bank – which will work with the private sector to finance major new projects.
And Mr Sunak confirmed he was tearing up rules in the Treasury Green Book which automatically directed investment to areas where it was likely to generate most economic activity, resulting in an in-built bias towards London and the southeast.
The changes were welcomed by the Northern Research Group of Tory MPs, who said they showed the government’s commitment to “levelling up the North and delivering on the compelling vision of prosperity as set out at the General Election last year”.
But shadow chancellor Anneliese Dodds said the Levelling Up Fund would see MPs forced to "beg for support for their areas, rather than that change being driven from local communities”.
She told MPs: “So much for taking back control. This is about the centre handing over support in a very top-down manner.”
Labour Treasury spokeswoman Bridget Phillipson denounced it as “pork-barrel politics from a government that’s learned nothing from the past”.
Mr Sunak said the new fund will be jointly administered by the Treasury, Department for Transport and Ministry for Housing, Communities and Local Government, taking a “new holistic place-based approach to the needs of local areas”.
“For many people, the most powerful barometer of economic success is the change they see and the pride they feel in the places we call home,” said the chancellor.
“People want to be able to look around their towns and villages and say ‘This place is better off than it was five years ago’.
“For too long, our funding approach has been complex and ineffective. And I want that to change.”
CBI chief economist Rain Newton-Smith said the spending review had laid the foundations for an economic recovery but the government needed to follow through on its commitments.
“It’s right to take this opportunity to plan for tomorrow but ambition must be matched by action on the ground,” she said.
“The government’s commitment to build, build, build must be delivered now.”
Jonathan Geldart, director general of the Institute of Directors, said the measures would provide a “significant boost” for business confidence.
“As ever, the acid test will be how quickly and effectively this funding reaches the ground,” he said.