Treasury’s green book, which assesses value for money in public spending, has been revised to favour projects outside London and the south-east © Incamerastock/Alamy

A flagship fund to finance small-scale infrastructure projects was launched by Rishi Sunak on Wednesday aimed at delivering the government’s levelling-up agenda to tackle regional inequality in England.

The chancellor said it would provide £4bn to improve “the infrastructure of everyday life” on projects up to £20m that can be delivered by the next general election in 2024, with £600m allocated for next year.

The so-called “Levelling Up Fund” was welcomed by Conservative MPs representing northern constituencies but was criticised by Labour for centralising the decision-making process in Whitehall which could benefit “Tory pet projects”.

The Treasury said funding would focus on “regenerating eyesores”, rebuilding roads, railway stations and town centres. Projects would need the support from local representatives such as MPs, mayors, councils and combined authorities.

“People want to be able to look around their towns and villages and say, yes: our community — this place — is better off than it was five years ago,” Mr Sunak said, adding: “The most powerful barometer of economic success is the change they see and the pride they feel in the places they call home.”

Conservative MPs in the so-called “red wall” areas of northern England and the Midlands, which heavily supported Brexit and switched from Labour to vote for Boris Johnson in last year’s election, have lobbied Mr Sunak to provide both money and mechanisms to improve their constituencies.

The fund was welcomed by Jake Berry, who leads the Northern Research Group of backbench Conservative MPs, as the moment that “levelling-up moved from an election-winning slogan to a reality on the ground”, adding: “It shows the government has been listening. We’ve worked very hard as a group with the chancellor and are pleased with the progress we’ve made.”

Ben Bradley, the Conservative MP for Mansfield, also welcomed the announcement and linked the money set aside to the controversial cut in the UK’s foreign aid budget. “I have no doubt it will be [welcomed] by the vast majority in Mansfield. These are challenging times and we have a duty to help these communities.”

But Steve Rotheram, Labour metro mayor of the Liverpool city region, attacked the initiative as “another centralised bidding process, centralisation not devolution”. He said he hoped “that areas left behind will receive support, but it is likely that Tory pet projects will be targeted”.

Noble Francis, chief economist at the Construction Products Association, said the levelling-up fund was “good in theory” given the lack of investment in the north and Midlands but warned that “unless it has some tangible benefits down on the ground quickly then it is just a nice marketing slogan to placate some very unhappy MPs”.

As well as the new fund, Mr Sunak announced that the Treasury’s green book, which assesses value for money in public spending, had been revised to favour projects outside London and the south-east as part of the government’s programme to tackle regional inequality.

This was underlined on Tuesday when the government said Transport for London would halt all development work on a proposed £30bn north-south underground rail link, dubbed Crossrail 2.

Workmen lay new fibre-optic cables for high speed broadband in a rural part of Kent, England © Simon Turner/Alamy

“This frees up investment to raise the performance of public transport networks in the regional cities towards London’s gold standard,” a Treasury spokesperson said.

The revised green book guidelines were designed to provide greater transparency on funding decisions, more focus on “place-based decisions” and a streamlined decision-making progress that would set out clearer goals, according to the Treasury.

The Johnson government has pledged to spend £600bn on major infrastructure projects, including rail, road and broadband, over the next five years with full details to be published in the spring.

The chancellor also confirmed plans for a new National Infrastructure Bank to channel billions into capital projects which will have a remit of helping deliver the UK’s commitment to reach “net zero carbon” by 2050.

The bank, which will be based in the north of England, will co-invest alongside private investors through a mix of loans, guarantees and equity stakes. It is in part intended to replace funding from the European Investment Bank, which the UK will leave at the end of the Brexit transition on December 31.

The Johnson government also signalled a possible break-up of National Grid is on the cards as it confirmed it was looking at the “right long-term role and organisational structure” for the Electricity System Operator, the body that manages supply and demand in Britain.

Additional reporting by Nathalie Thomas and Philip Georgiadis

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