Chancellor Rachel Reeves has confirmed plans to deliver “Europe’s Silicon Valley” in the Oxford-Cambridge Growth Corridor that will boost the UK economy and lift confidence, but could widen the north-south economic divide.

Ms Reeves’ plans are expected to turbocharge the UK economy by up to £78 billion over the next ten years, according to industry experts.

While there are commitments to invest beyond London and the southeast, including a ‘strategic partnership’ in Glasgow, the scale of support for what was once known as Silicon Fen is likely to ring alarm bells in other parts of the UK.

In a speech in Oxfordshire, Ms Reeves said: “Oxford and Cambridge offer huge economic potential for our nation’s growth prospects.

“Just 66 miles apart these cities are home to two of the best universities in the world two of the most intensive innovation clusters in the world and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI.

“It has the potential to be Europe’s Silicon Valley. The home of British innovation.”

The Chancellor’s plan for the Oxford-Cambridge corridor will include funding towards better transport links such as East-West Rail.

This will see new services between Oxford and Milton Keynes this year and a new East Coast Mainline station in Tempsford, to expand the region’s economy. The A428 will be upgraded to reduce journey times between Milton Keynes and Cambridge.

Prioritisation will be given to a new Cambridge Cancer Research Hospital as part of the New Hospitals Programme bringing together Cambridge University, Addenbrookes Hospital and Cancer Research UK.

There willl be nine new reservoirs and the Environment Agency has lifted its objections to a new development around Cambridge that could unlock 4,500 homes and associated community spaces such as schools and leisure facilities as well as office and laboratory space in Cambridge city centre. Oxford will get its own Growth Commission.

Sir Patrick Vallance has been appointed Oxford-Cambridge Growth Corridor Champion to provide senior leadership to ensure the Government’s ambitions are delivered. 

The Chancellor declared that Britain’s economy has “huge potential” and is at the “forefront of some of the most exciting developments in the world like artificial intelligence and life sciences.”

Ms Reeves will review the Green Book – the government’s guidatialnce on appraisal – in order to support decisions on public investment across the country, including outside London and the Southeast.

Among projects for the north of England are investment in Old Trafford, Manchester, where billionaire Sir Jim Ratcliffe is building a new football stadium, and the reopening of Doncaster-Sheffield airport, the latter being a reinstatement of existing infrastructure. There was no mention of support for the Grangemouth oil refinery, also owned by Sir Jim Ratcliffe and which is due to close.

With expectations that more substantial expansion will be approved for Heathrow, Gatwick and Luton airports, on top of completion of HS2 between Birmingham and London, the scale of ambition in the south of England is likely to raise questions as to how other areas of the UK will avoid falling behind. With backing for the Oxbridge corridor, it will intensify competition for investment and skilled workers.

The speech comes after the Chancellor last week announced a new approach for the National Wealth Fund (NWF) and the Office for Investment (OFI) to work with local leaders to build pipelines of incoming investment and projects linked to regional growth priorities.

This includes the NWF trialling Strategic Partnerships in Greater Manchester, West Yorkshire, West Midlands, and Glasgow City Region and the OfI piloting an approach in the Liverpool City Region and the North East Combined Authority to connect their regions to central government and industry expertise in order to unlock private investment.

Commenting on announcements, Rain Newton Smith, CEO, CBI said: “It’s crunch time for growth and today the Chancellor has heeded business’s call to go further and faster. 

“This is most evident in Ministers grasping decisions that have sat on the desk of government for too long. This positive leadership and a clear vision to kickstart the economy and boost productivity is welcome.   

“The Chancellor’s announcements are smart, looking to leverage the UK’s strengths including our world class universities, innovation and openness to global talent.

“Along with action on planning reform, commitments to airport expansion and transport infrastructure improvements, and mobilising pension capital this is the kind of initiative that will give confidence to investors at home and abroad.  

“Businesses were in need of a boost in confidence after a tough period that has seen their overheads increase and headroom for investment squeezed. Firms in the everyday economy will need to stay front and centre of government decisions to create the jobs, investment and growth we all want.”  

Comment: Reeves and the forgotten economy