Raising Finance

Autumn Budget 2017: Launch of £1.7bn Transforming Cities Fund

5 min read

22 November 2017

Special projects journalist

Half of the fund will be shared by the six areas with elected metro mayors to enable them to deliver local transport priorities.

A new £1.7bn Transforming Cities Fund has been announced by the chancellor Philip Hammond in today’s Budget to “back the Northern Powerhouse, the Midlands Engine and elected mayors across the UK.”

Half of the fund will be shared by the six areas with elected metro mayors to enable them to deliver local transport priorities. The remainder will be open to competition by other cities in England.

£300m is being allocated to HS2 infrastructure to accommodate future Northern Powerhouse and Midlands Engine rail improvements, and £30m will go on a trial for new solutions to improve mobile and digital connectivity on trains on the TransPennine route.

Other investments include a replacement of the 40-year-old rolling stock on the Tyne and Wear Metro at a total investment of £337m, and £123m in the Redcar Steelworks site.

The funding announcement was well received by those that believe it is a much-needed cash injection for the North.

Doug Monro, co-founder of Adzuna, said: “There are still more than 1.4m people out of work in the UK and our site currently carries more than 1.1m vacancies. It is therefore encouraging to hear the OBR forecast another 600,000 more people in work by 2022…Money allocated to help transform cities outside the capital will also help keep the Northern Powerhouse and the Midlands Engine in full operational order. For the UK jobs market to hit top speed, all of our regions need to fire on all cylinders and further investment will help oil the wheels.”

John Keyes, international partner and head of Cushman & Wakefield’s Manchester office said: “In Greater Manchester, there is a sense of a long-term plan, but despite devolution, the city region and wider north west is still heavily influenced by decisions made in London and we still need Government support and money to deliver the vision…

“The award of £243m to Greater Manchester from the Transforming Cities Fund for more local transport improvements should help productivity and support new housing development across the city region.”

Yet some commentators believe the government should be doing more to address the North/South divide.

Ben Craig, Manager of R&D Tax Incentives, said: “We’ve heard plenty of positive announcements regarding the Northern Powerhouse in recent months, not least the announcement of an additional £300m for rail improvements in the north. Although welcome, these investments fail to address some of the key issues around the economic divide between ‘The North’ and ‘The South’.

“It’s time to address issues beyond infrastructure. The main concern is the brain drain – a direct pipeline of talent and inspiration trickles from the North to the South. Graduates complete their studies then make the move to London. Startups form in the North but end up relocating to the capital. It’s an unhealthy situation, drawing entrepreneurs and their funding away from the region.”

Chris Rawstron, a partner at law firm Irwin Mitchell in Birmingham, said: “Many businesses were looking for an announcement from the Chancellor on new transport infrastructure and the £1.7bn Transforming Cities Fund was a good start, particularly for those cities with Metro Mayors. According to our research, there are no cities from the Midlands and the North of England in the top ten for fast economic growth. This must change and providing tangible investment in transport infrastructure can contribute to productivity gains, something which is vital for our future prosperity.

“We welcome the on-going commitment to the Midlands Engine and The Northern Powerhouse along with confirmation of a second devolution deal in the West Midlands. This will provide a further devolution of powers from Whitehall and a funding boost to the region.”