By Richard Johnstone | 3 December 2014
The government will create a sovereign wealth fund for the North of England so that shale gas revenues in the region can be used to invest in its own economic growth, George Osborne has announced.
Setting out the proposal as part of Autumn Statement measures to create what he calls a Northern Powerhouse, the chancellor also confirmed a £250m investment to create an institute for advanced material science in Manchester. The new Sir Henry Royce Institute would also have branches in Leeds, Liverpool and Sheffield.
Osborne also confirmed the government would tender for new operators for the Northern Rail and the Trans-Pennine Express rail franchises in the region. These contracts would specify the replacement of the unpopular Pacer trains.
However, no further devolution deals with northern cities were announced in his statement.
It had been expected that Leeds and other cities would join Manchester in agreeing additional local powers, but instead the chancellor said his ‘door is open to other cities who want to follow their cross-party lead’.
Announcing the proposed long-term investment fund from tax revenues from shale for the North, and other areas hosting shale gas developments, the chancellor said it would capture the economic benefits of shale gas for future generations.
However, proposals will not be brought forward until the next Parliament.
‘Our ambition is to build a Northern Powerhouse as a complement to the strength of our capital city, where we bring together our great cities of the North,’ Osborne said.
‘We’re announcing a new sovereign wealth fund for the North of England so that the shale gas resources of the North are used to invest in the future of the North.’
Responding to the announcements, IPPR North director Ed Cox said the continuing emphasis on a Northern Powerhouse was welcome, and reflected the calls of businesses and city leaders for a strategy to rebalance the national economy.
‘The statement includes some important building blocks concerning science, infrastructure, business rates and devolution that will be welcomed by many.’
However, he said it was ‘disappointing’ that other cities had yet to follow Manchester’s lead and broker devolution deals.
‘It is right that they should take the necessary time to ensure their deals meets their local aspirations but they must not lose the devolutionary momentum generated by the Scottish referendum and we need to see plans for progress outside of the big cities too.’
