02/10/2017 00:02 BST

Philip Hammond Announces £400m Boost To 'Northern Powerhouse'

Cash injection will pay for new rail links and roads - but Labour says it's a 'drop in the ocean'.

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Chancellor Philip Hammond will use his Conservative party conference speech to unveil £400 million of new investment in the ‘Northern Powerhouse’.

The cash boost will pay for new rail and road links connecting cities not directly on the route of HS2, the government’s flagship high speed rail project, which will cut journey times between London, the Midlands and the north.

An initial £300 million will be invested in rail - improving connections between Liverpool, Manchester, Sheffield, Leeds and York - and a further £100 million will be ploughed into 33 major new road schemes - 10 in the north east, 13 in the north west and 10 in Yorkshire and Humber.

The government, which was accused of leaving ex-Chancellor and now Evening Standard editor George Osborne’s oft-touted Northern Powerhouse plan to rot - says its announcement will “cut traffic congestion and journey times and improve connections - unlocking sites for new job creating businesses and potential new housing developments”.

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Former Chancellor George Osborne

In his speech to delegates in Manchester on Monday, Hammond is expected to say: “Our economy is not broken: it is fundamentally strong.  And while no one suggests a market economy is perfect, it is the best system yet designed for making people steadily better off over time and underpinning strong and sustainable public services for everyone.

“As this model comes under renewed assault, we must not be afraid to defend it.

“The market economy frees people and businesses, encourages them to create, take risks, give ideas a go because they can see the results and benefit from their success.

“It’s the profits from such businesses that underpin our savings and our pensions. And the wealth that a strong market economy creates which, in the end, pays for our public services.”

The Tories, who were heavily criticised for reneging on manifesto promises to invest in major rail electrification projects in the north of England, say they will have invested a “record £13 billion” in transport in the north by 2020.

Hammond will add: “We are the party of progress. The party that makes a clear commitment to the next generation - that they will be better off than us; and that their children will be better off again than them. This is the Conservative definition of progress and I pledge to the next generation: we will not let you down.”

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At a conference reception for northern Tory delegates on Sunday evening, MEP and European Conservative deputy leader Jacqueline Foster said her party would make sure Brexit was a success for the north. 

“It’s about time politicians in this country got out there and told everybody what we do,” she added.

“And that will continue post Brexit.  We are going to make sure that Brexit works. So for those doom-mongers, I say there is an answer to everything.”

But Labour’s shadow chancellor, John McDonnell, said the new announcement was “a drop in the ocean” compared to the level of investment needed in cities outside of London.

He added: “It is almost an insult when you remember the tens of billions the Tories still plan to hand out to the super-rich and big business in tax giveaways over this parliament.

“After a year in the job, Philip Hammond just wants to continue with the seven years of Tory economic failure that has seen the level of investment in our country fall behind many of our international competitors.  He is particularly holding back the north, investing just one-fifth on transport per head as is spent in London.  

“Only Labour has a plan to provide the serious infrastructure investment our country needs, to build the high wage, high skill economy of the future, for the many not the few.”