Rishi Sunak is expected to make tens of billions of pounds available for infrastructure investment across the UK next week.
The Chancellor will use his spending review to announce a £600 billion “build back” fund that will see projects in “all nations and regions” funded over the next five years.
The government will also publish the terms for the long-awaited shared prosperity fund, which will target funding at “left-behind places and people in need”, including towns, coastal communities and former industrial heartlands.
This will include £220 million next year for local areas to pilot programmes well before investment from EU Structural Funds start to tail off across nations.
To ensure that government policies have the most impact, the Treasury will set up a headquarters in the north of England next year.
This move will form part of a wider strategy that will see thousands of civil servants move to the regions and nations of the UK.
Mr Sunak said: “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.
“All nations and regions of the UK have benefited from our unprecedented £200 billion Covid support package.
“And after a difficult year for this country, this spending review will help us build back better by investing over £600 billion across the UK during the next five years.”
Spending review looms
The spending splurge comes amid rumours the Treasury is also considering a public sector pay freeze to pay down the cost of the pandemic.
Mr Sunak is reportedly preparing to announce a limit on the pay of millions of council staff, civil servants, teachers, police and other public servants when he unveils his spending review next week.
Frontline NHS doctors and nurses are expected to be exempt from any cap in recognition of their work during the coronavirus crisis.
Unions reacted angrily to the prospect of a wage freeze after such a tumultuous year, with one saying industrial action could not be ruled out.
‘Industrial action cannot be ruled out’
Mark Serwotka, general secretary of the Public and Commercial Services union, said: “Civil servants along with millions of other public sector workers have kept the country running throughout this pandemic, and the last thing they deserve is another pay freeze.
“Our members have been providing universal credit, collecting tax, securing our borders and prisons in this unprecedented pandemic and have already suffered 10 years of pay restraint.
“Private companies have been allowed to secure lucrative Covid contracts to the tune of £17bn, yet ministers are not prepared to reward their own staff for all the incredible work they have done this year?
“If Rishi Sunak fails to pay public sector workers properly, there will be widespread anger and industrial action cannot be ruled out.”