The chancellor has given £300m to kick-start the Northern Powerhouse Rail project following criticism by northern council leaders that ministers had failed to back it, stifling the region’s economy.
In his Conservative conference speech Philip Hammond confirmed the funding, which is new money, and said the government is “committed to the Northern Powerhouse project” as well as the Midlands Engine.
The chancellor said the £300m would “future-proof the railway network in the North, ensuring HS2 infrastructure can link up with future Northern Powerhouse and Midlands rail projects”.
LGC previously reported how Mr Hammond’s predecessor as chancellor, George Osborne, had said the Northern Powerhouse rail project, a high speed rail service linking Liverpool and Hull, could cost as much as £7bn.
The new money will be used to create connections between the HS2 rail route and cities which are not directly served by it, improving journey times between cities including Liverpool, Manchester, Sheffield, Leeds and York, as well as Leicester in the East Midlands.
A number of northern council leaders and mayors criticised the government in July for rowing back on a series of electrification projects in the region.
Mr Hammond said: “Today I am announcing a further £300m to future-proof the railway network in the north. This investment will go towards ensuring HS2 infrastructure can link up with future Northern Powerhouse and Midlands rail projects - helping the towns and cities of the north reach their full potential.”
He was also due to announce investment in 33 major new road schemes, including 10 apiece in the north east and Yorkshire & Humber.
Greater Manchester CA mayor Andy Burnham (Lab) welcomed the announcement but described it as “only a first step towards providing the investment that the north needs and was promised”.
“At best this investment will only deliver benefits in the future. However the travelling public in the North is having to put up with sub-standard rail services right now. Electrification across the Pennines was promised in 2011 but today the chancellor was silent on this. People here deserve a better answer on when Manchester to Leeds services will improve,” he said.
“Today’s announcement would not have been made if the north had not got organised and found its voice over the summer. We won’t put up with clapped out trains and congested roads any longer. Until we have a clear plan for the investment required to build a Northern Powerhouse we were promised, the voice of the north will only get stronger.”
Shadow local government minister Jim McMahon said the total £400m “won’t even touch the sides of the challenges facing the north”.
Mr McMahon said councils faced a £5.8bn funding gap by 2020 and said Labour would instead “introduce a radical devolution agenda which sees power handed back to communities, giving councils, residents and business the opportunity to shape the way their services are delivered.”
However, Mr Osborne, in his capacity as chair of the Northern Powerhouse Partnership, said: “It’s very welcome that the chancellor has listened to communities and businesses across the north calling for this down-payment on Northern Powerhouse Rail – and it demonstrates the impact the north can have when we act in partnership and speak with one voice.”
Lord O’Neill, formerly the leading Treasury minister working on city devolution and the northern powerhouse, described the £300m as a “much-needed first step” towards the rail project. Speaking as a board member of the Northern Powerhouse Partnership, Lord O’Neill expressed a commitment to work with the government, Transport for the North, and businesses to “ensure people across the North benefit from this transformational scheme”.
A spokeswoman for Transport for the North described the funding as “a significant step forward” in its plans to develop the project.
“It will enable much-needed transformational rail connections for the north to be delivered cheaper, faster and with less disruption,” she said. “We look forward to continuing to work with the government and partners to ensure that future growth in services is planned for when designing these vital connections.
“This will include further work on the arrangements at Manchester Piccadilly and we are pleased that the chancellor recognises the importance of keeping ‘all options open’. This will ensure that there is enough capacity and flexibility to provide for both HS2 and Northern Powerhouse Rail services, and to allow for growth throughout the 21st century and beyond.”
Mr Hammond, who was introduced by Tees Valley CA mayor Ben Houchen (Con), also confirmed in his speech that an extra £10bn will be made available for the Help to Buy scheme.
Responding to the announcements Carolyn Fairbairn, director general of the Confederation of British Industry, said Mr Hammond’s speech “shows a government strong on diagnosis, but weak on action”.
“Businesses looking for clear vision and urgent delivery have been left with slim pickings,” she said. “Renewing the UK’s creaking infrastructure will unlock regional growth and living standards, as will improving access to housing. But they are only parts of the puzzle.”
Ms Fairbairn added: “A potent cocktail of Brexit uncertainty and dogma-driven politics on both left and right threatens jobs, investment and living standards.”