Reeves
plans to create ‘Silicon Valley’ between Oxford and Cambridge
Chancellor
to announce plans to improve infrastructure in region to put it at forefront of
science and tech advances
Pippa Crerar
and Heather Stewart
Tue 28 Jan
2025 22.30 GMT
Rachel
Reeves is unveiling plans to create “Europe’s Silicon Valley” between Oxford
and Cambridge as she stakes the government’s success on kickstarting economic
growth and putting more pounds in people’s pockets.
The
chancellor will announce a blueprint to improve infrastructure across the
region that will add up to £78bn to the UK economy within a decade, according
to industry experts, and put it at the forefront of science and technological
advances.
In a major
speech to business leaders, she is also expected to confirm plans to expand
Heathrow airport, overhaul planning rules and fast-track building projects, but
has prompted fears that carbon targets and nature protections are under threat.
Reeves has
struck a more optimistic tone in recent weeks, after being criticised for
undermining confidence following Labour’s election victory last July, by
highlighting the Tories’ disastrous economic legacy.
Her speech
is viewed inside government as an opportunity to pivot away from the economic
“doom and gloom” that characterised Labour’s early months and start to focus on
delivering real change.
However, the
latest official data suggests the economy may have flatlined in the second half
of 2024, intensifying the pressure on the government to show it can boost
growth and improve living standards.
Reeves is
expected to say the government will go “further and faster” to boost growth,
“ending the era of low expectations” and “putting Britain on a different path”
with its plans. However, she has spooked some Labour MPs and environmental
campaigners with her relentless pursuit of growth.
“Britain is
a country of huge potential … We are the forefront of some of the most exciting
developments in the world like artificial intelligence and life sciences. We
have great companies based here delivering jobs and investment in Britain,” she
will say.
“But for too
long, that potential has been held back. For too long, we have accepted low
expectations, accepted stagnation and accepted the risk of decline. We can do
so much better.
“Low growth
is not our destiny. But growth will not come without a fight. Without a
government that is on the side of working people, willing to take the right
decisions now to change our country’s course for the better.”
Economists
have suggested that two of the most immediate ways to boost growth would be
higher migration and a better trading relationship with the European Union,
neither of which Reeves is expected to address in her speech.
Reeves’
decision to revive the Oxford-Cambridge corridor marks a return to political
favour for a scheme shelved three years ago by Boris Johnson in order to
prioritise levelling up spending in the north of England.
Sir Patrick
Vallance, the science minister, will oversee the plan. He said: “The UK has all
the ingredients to replicate the success of Silicon Valley or the Boston
Cluster but for too long has been constrained by short-termism and a lack of
direction.”
Reeves will
announce that the Environment Agency has lifted its objections to building
4,500 homes around Cambridge and that water companies will invest £7.9bn over
five years on water infrastructure including reservoirs in the Fens and
Oxfordshire.
There will
also be investment in transport links between the two cities, including a new
east coast mainline station in Tempsford, road upgrades and new east-west rail
services, with the journey by train currently taking two and a half hours.
However, the
chancellor’s growth strategy has underlined concerns the government is placing
too much emphasis on the south of England as it seeks to kickstart the flagging
economy. All of the airports earmarked for expansion – Heathrow, Gatwick and
Luton – are in the south.
The Treasury
pointed to recent announcements about projects backed by Labour’s national
wealth fund, which ministers say has a mandate to create jobs across the UK.
But regional mayors are demanding more powers – including over tax and spend –
in order to play their part in boosting growth.
The chair of
the UK Mayors group, Tracy Brabin, who represents West Yorkshire, said: “We
know that you can’t get economic growth nationally without doing it in the
regions. Mayors stand ready to deliver on the growth mission but we need the
right powers and financial freedoms to do that.”
There are
also concerns over the environmental impact of Reeves’ plans, in particular
airport expansion. An analysis by the Green Alliance shows it would put the
government on “collision course” with its own climate targets.
They argued
that the government’s strategy for cleaner flying relies heavily on
technologies that are unproven, such as zero-emission flights powered by
electricity or hydrogen, and sustainable aviation fuels.
Other green
groups questioned the economic benefits of airport expansion. Greenpeace UK’s
chief scientist, Dr Doug Parr, said: “Chasing growth for growth’s sake is not
an economic strategy.
“Instead of
picking up any old polluting project from the discard pile, the chancellor
should focus on green industries that can attract investment and bring economic
and social benefits for years to come, like secure jobs, affordable energy
bills and cheaper, better transport.”
Friends of
the Earth’s Rosie Downes added: “Rachel Reeves’s assertion that growth trumps
other concerns, and her reported support for aviation expansion, has set alarm
bells ringing that our environment is under significant threat.
“A strong
economy is vital, but this can be achieved without undermining crucial climate
targets and nature protections. The green economy is growing fast, and with
greater government support it could expand even quicker. It needn’t be a
question of growth or the environment when we can have both.”
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