Philip Hammond’s announcements of extra spending in the UK’s regions were dismissed as more talk than substance by a former Treasury minister and the Labour opposition.
Jim O’Neill, architect of the Northern Powerhouse plan along with Mr Hammond’s predecessor George Osborne, said “this government needs to become much more committed to the Northern Powerhouse or stop talking about it”.
“The critical investment we need in transport, education, skills, devolution and increasing productivity is not being delivered,” said Lord O’Neill, the vice-chair of Mr Osborne’s Northern Powerhouse partnership.
He welcomed Mr Hammond’s decision to spend £37m to further develop plans for a rail line between Liverpool and Newcastle through the north’s big cities. But he pressured the Treasury to approve the £24bn-plus Northern Powerhouse Rail scheme within months.
Mr Hammond pledged to “fire up the Northern Powerhouse and put fuel in the Midlands Engine”, with strategies to connect the region’s cities and invest in science, culture and skills to boost their economies.
He earmarked £770m to extend until 2023 the Transforming Cities Fund, which invests in transport schemes; £120m for the Strength in Places Fund to support areas of R&D excellence; and £10m to generate proposals for new business-backed Development Corporations in areas in need of regeneration.
The South Tees Mayoral Development Corporation, established by Conservative mayor Ben Houchen, is in line for up to £14m.
If parliament gives approval, it will establish a Special Economic Area, the UK’s first, on 4,500 acres incorporating the former Redcar SSI steelworks, which shut three years ago. The Development Corporation will be able to retain business rates to reinvest in developing the site, reducing the burden on local taxpayers.
Mr Houchen said: “I don’t want to see the money we generate here on Teesside disappearing back to London. If you invest here, and pay taxes here, the money should stay in Teesside.”
Mr Hammond also announced £5m for 10 university enterprise zones as well as £115m to extend funding for industry-led regional research centres.
Belfast received £350m as part of a city deal devolving money and powers from Whitehall. There was also £150m for the Tay Cities, centred on Dundee, in Scotland and £120m for North Wales.
The West Midlands is to get £20m for a Mobility Data Institute, a research centre to collect, process and analyse transport data. The government is giving up to £70m to help build the Defence and National Rehabilitation Centre near Loughborough, which will help injured soldiers and civilians.
Jonathan Walker, assistant director of the North East England chamber of commerce, said there were some welcome “one-off” announcements but a lack of substance on the crucial area of exports. He also called for Northern Powerhouse Rail to be funded in full.
Jeremy Corbyn, the Labour leader, said in his response to the chancellor: “Britain is the most regionally-unequal country in Europe. The government reinforces these disparities.”
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