The Treasury is understood to be planning to rewrite its rules to permit greater investment in areas such as the north of England and the Midlands after years of complaints that the current system overly favours London and the south-east.

The change to the method of evaluating the economic benefits of spending, which the Treasury is expected to make before the spring budget, was welcomed by the Northern Powerhouse Partnership, the government’s economic cheerleader and coordinator for the north.

Government investment decisions are currently based on gross value added, a metric that assesses the net financial contribution of spending to the economy.

Critics have long argued it is a blunt measurement system that overrewards concentrations of businesses and people, as it deems them to be more efficient, and thus penalises regions away from London and the south-east.

According to the Times, which initially reported the policy change, the new rules would introduce metrics to determine spending, such as improving the wellbeing of people in certain areas, or reducing regional productivity gaps.

Jim O’Neill, the economist and crossbench peer who is the Northern Powerhouse Partnership’s vice-chair, said “the static, accounting-based approach of value for money in assessing investment projects does not make any sense”.

He added: “By definition, it adds to the attraction of projects in heavily populated, economically vibrant areas – usually London – and doesn’t allow for potential major productivity-enhancing projects elsewhere, including many in the north, and especially Northern Powerhouse Rail.

“I truly welcome a change to this approach, and hope it is for real. It would be a huge boost for many investments across the country, as well as throughout the ‘northern powerhouse’.”

A Treasury spokeswoman said: “We work across government to ensure investment is focused on where it is needed across the UK and delivers value for money for the taxpayer.”

Changing the investment rules would be part of a wider attempt by Boris Johnson’s government to shore up its support in the Midlands and the north, where the Conservatives won a series of key seats in the general election.

During the campaign, Johnson promised increased investment in transport infrastructure, as well as areas such as the NHS, education and policing, after almost 10 years of cuts.

During the election campaign, Labour argued strongly for a change in approach, with investment to alleviate regional economic discrepancies and part of the Treasury moved to the north to oversee more devolved spending decisions.