John McDonnell has announced that Labour would recreate regional government offices and that the Treasury unit tasked with overseeing a £150bn social transformation fund would be based outside of London in a bid to “put power into the hands of communities”.
In a speech in Liverpool today, the shadow chancellor said that a Labour victory in the general election on 12 December would herald an “irreversible shift in the centre of gravity in political decision making and investment” from London to the north of England, with the transformation fund would be used to “upgrade and expand” public infrastructure such as schools, hospitals, care homes and council houses.
Spending would be overseen by a dedicated unit of the Treasury based in the north of England under plans to “reprogramme the Treasury” to implement Labour’s plans to shift the balance of economic power.
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“Our aim as a Labour government is to achieve what past Labour governments have aspired to,” he said. “An irreversible shift in the balance of power and wealth in favour of working people. That means change – means investment on a scale never seen before in this country and certainly never seen before in the north and outside of London and the south east.
“To achieve that objective also requires therefore an irreversible shift in the centre of gravity in political decision making and investment in this country from its location solely in London into the north and regions and nations of our country.”
The Treasury unit will be based outside London to ensure the regions gets their fair share of investment, he said.
“On the scale of change investment needed, I can tell you today that Labour’s National Transformation Fund will be bigger than we promised at the 2017 election. For areas that haven’t had their fair share for years, we’ll deliver £250bn of investment here and around the country over the next 10 years through our Green Transformation Fund.
“But it’s not just the natural world that’s been neglected. So we’ll also commit to an additional £150bn in a new Social Transformation Fund.”
McDonnell also set out other planned changes to move more civil servants out of London, including re-establishing government offices in the nine regions of England. These existed from 1994 until they were abolished by the Conservative-Lib Dem collation government in 2010.
These regional offices would be staffed by civil servants from departments including the Treasury, the Department for Business, Energy and Industrial Strategy, the Ministry of Housing, Communities and Local Government, and the departments of transport and education.
According to Labour, their responsibilities will include setting priorities for regional development banks the party has also pledged to create, setting priorities for regional spatial planning and industrial strategies, as well as identifying and delivering projects to be funded from the Local Transformation Funds.
The offices will be overseen by an executive board of county and city leaders in the area, according to the party.
McDonnell also set out further plans to reform the Treasury. “My Treasury ministerial meetings will no longer be solely in London,” he said. "Labour’s Treasury ministers will meet outside of London and will have a ministerial office in the north. The centre of gravity of political gravity is shifting away from London.
“This is where the investment is needed and this is where those decisions on investment need to be made on the ground. Power is coming home. Back to the people. We can only deliver the real change we need by putting power into the hands of communities.”
Reform of the Treasury has been a long-standing Labour pledge since the former head of the civil service Lord Bob Kerslake undertook a review for McDonnell in 2017 that said the department needed a much more sharply defined role to shake the perception among the rest of Whitehall that it is "arrogant, overbearing and negative". Kerslake has gone on to advise the party on its plans for government.