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18 October 2021

No matter who’s prime minister, the Treasury always wins

Boris Johnson’s “levelling-up” plans for the north are being stalled once again by a department determined not to spend money.

By Jonn Elledge

“No matter who you vote for,” the old joke and/or song by the Bonzo Dog Doo-Dah Band runs, “the government always gets in.” You can read this as nothing more than a cynical sneer, a comment on the unbridgeable divide between us and them. But I think there’s something more to it: a government isn’t just the elected politicians at its head.

Consider the matter of Boris Johnson and the Treasury. For all the adjectives one might use for the UK’s much-loathed Prime Minister, no one would ever call him a fiscal conservative: he gives the impression, indeed, that the primary function of public money is for him to spend on pointless boondoggles whose names begin, suspiciously often, with the letter B.

At the same time, now that his government has Got Brexit Done (it hasn’t, but let’s not worry about that right now), its comms strategy is built around two new slogans: Levelling Up, a hand-wave that implies raising the neglected rest of the country to the level of prosperity enjoyed in the south of England; and Build Back Better, which is basically the same, but in a post-Covid flavour.

Exactly what either of these slogans mean in practical terms is quite hard to pin down: polling commissioned by the Centre for Cities and ITV recently found that barely 40 per cent of the public think they know what levelling up actually means. But since one cause of England’s economic divide is the disappointing productivity of many of its major cities, since the difficulty of getting around and between them is generally cited as one of the reasons for that, and since this government has been promising to tackle the former by addressing the latter ever since austerity was but a glint in George Osborne’s eye, then one might assume that levelling up and building back better would mean making the infrastructure investments required to sort out the country’s wobbling rail network.

Sure enough, this tends to feature heavily in the grand promises that ministers like to waft in the vague direction of the Red Wall. There’s the Midlands Hub, a £2bn package of measures intended to create extra rail capacity for both passengers and freight between the East Midlands and south Wales. There’s the Northern Powerhouse Rail (NPR) scheme – aka High Speed 3, aka Crossrail for the north – a new, faster line between Liverpool and Leeds. And then of course, there’s High Speed 2 (HS2), which by creating a new route for high-speed trains will clear more paths for regional and local services.

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If you’re a train nerd, which luckily I am, then all this is terribly exciting. There’s just one minor problem. These schemes all need to get past the Treasury. And the signs are not looking good.

HS2 is already under construction from London to Birmingham, and seems likely to get to Crewe as well. But officials have been briefing that the eastern leg, from Birmingham to Leeds, may be for the chop, and Transport Secretary Grant Shapps recently told the Financial Times that the scheme would need to be reconsidered in light of those other projects.

The thing is, the Treasury doesn’t look that keen on those other projects either. The Midlands Hub thus far exists as nothing more than a £20m budget to plan it (these things are expensive). As to NPR, rumours have been flying that the need to reduce costs would force a choice between a route via Bradford (which, despite being a sizeable city in the middle of the country, has terrible rail connections), and a brand new underground station at Manchester Piccadilly (which is still waiting for a bunch of improvements Obsorne promised under the branding “Northern Hub” back in 2014).

Now, though, word is the Treasury is determined to fund neither, leaving Bradford isolated and a capacity bottleneck at Manchester Piccadilly. At every stage this government has made big promises about sorting out the north’s rail network. And at every stage, the Treasury has said no – even though doing it cheaply will almost certainly mean worse outcomes, or having to do it again, or both.

Perhaps we can blame this on the long-standing “Treasury view”, the assertion that public investment necessarily crowds out private, or the tendency for public accounts to worry more about liabilities than assets. But all that’s an attempt to add an intellectual gloss to a more fundamental statement: the Treasury doesn’t like spending money, and capital is easier to cut than revenue. That goes double for capital spent a long way from London, where, by a staggering coincidence, the Treasury is based. Perhaps the decision to move a quarter of the department to Darlington will help with that. Or perhaps, if the attempts to move broadcasters to Salford while leaving commissioning decisions in London is anything to go by, it won’t.

At any rate, if ever there was a Tory prime minister whose instincts were to turn on the spending taps and to hell with the consequences, it’s Boris Johnson. And if ever there were infrastructure schemes that would add some meat to the bones of empty slogans like “levelling up” and “building back better”, it’s sorting out the rail network in the Midlands and the north.

Yet as things stand, it looks uncomfortably likely that neither of those things are going to happen. Whoever you vote for, the Treasury always gets in.

[See also: Brexit isn’t done – and Boris Johnson can’t answer the Irish Question]

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