Rishi Sunak has announced two new economic hubs will open in northern England – a move that will be seen as an attempt by the Conservatives to strengthen support outside their traditional heartlands.
A Treasury campus will be set up in Darlington and a national infrastructure bank will be situated in Leeds, the chancellor confirmed in his budget speech.
Several other locations including Bradford, Newcastle upon Tyne and Tees Valley were said to have been under consideration for a plan to move Westminster-based civil servants north.
Sunak announced plans for another Treasury headquarters in last year’s budget but after an extensive scoping exercise, made the long-awaited decision on Wednesday to choose the County Durham town of Darlington.
The chancellor said he was “really excited for what this means for all of you and us” and added the decision followed “a lot of thought and energy”, in an all-staff video message seen by the Guardian.
In Leeds, Sunak promised the infrastructure bank will be up and running “in an interim form” by spring 2021.
Its role will be to dole out £13bn of equity and debt capital, and issuing up to £10bn of guarantees, as well as offering loans to local authorities from the summer.
“Redrawing our economic map means rebalancing our economic investment,” added Sunak, who is also MP for Richmond in Yorkshire.
Details about how many civil servants could be relocated to Darlington and how many jobs could be created in the region have not yet been clarified, but the government already plans to move 22,000 civil servants out of the capital by 2030.
The policy mirrors a pledge in Labour’s 2019 general election manifesto when the then shadow chancellor, John McDonnell, pledged to “break up No 11” and move it “to the north”.
Sunak is likely to use the announcement to underline the government’s commitment to “levelling up” – a key plank of the Conservatives’ manifesto.
Ministers have been trying to find ways to hold on to the raft of so-called “red wall” seats in northern England won from Labour, under pressure from the 2019 intake of Tory MPs who are keener on higher levels of public spending.
Sunak has said previously: “We are absolutely committed to levelling up opportunities so those living in all corners of the UK get their fair share of our future prosperity.”
In autumn the Northern Policy Foundation, a Manchester-based thinktank founded by Conservative MPs, recommended that the new Treasury northern headquarters should be in Leeds.
Tom Lees, director of the foundation said, said on Wednesday that while Darlington was not their top choice, “it did come in the top 20% of possible locations in the north”.
He added the move should “help tackle groupthink, boost local growth and create opportunities in areas that have sometimes been overlooked and forgotten”.
Darlington is close to some former red wall seats including Sedgefield – Tony Blair’s former constituency – Bishop Auckland and North West Durham.
Sarah Nickson, a civil service researcher at the Institute for Government, said when the Office for National Statistics shifted its headquarters from London to Newport in south Wales, 90% of London-based staff decided to stay in the capital and find other jobs – resulting in “disruption” that “continued to hamper” the organisation’s work for a decade.
She also called putting the Treasury HQ and infrastructure bank in different locations a “missed opportunity” because “generalist” mandarins like to move between roles and departments, so “providing these opportunities in a single place” would have helped “persaude ambitious civil servants that shifting to Darlington is a bet worth taking”.