Reeves plans to create ‘Silicon Valley' between Oxford and Cambridge

The Guardian

28-01-2025

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.'