Chancellor John Healey is set to pump £150m into start-ups across the North of England as part of the government’s wider devolution and economic growth agenda.
The fund will be directed at university spin-outs and other early-stage businesses in Liverpool, Manchester, Leeds, Sheffield and Newcastle.
Healey will announce the initiative during a speech at a leading British manufacturing site, with the money drawn from the British Business Bank’s existing budget.
The Chancellor is expected to say the fund will be used “to get behind the most innovative and fast-growing firms. This is not sentimentality, it’s supply side economics.”
The £150m in public funding is designed to act as a catalyst, attracting further private investment into Northern businesses and innovation hubs.
The announcement also serves as economic backing for Prime Minister Andy Burnham’s devolution drive, which he has pledged will deliver “growth in every postcode.”
Healey is expected to argue for “city regions with real power, supported by a stronger state, creating local industrial strategies and using public investment to unlock private investment, to support our innovation economy, and to create the new jobs their areas need.”
The Chancellor will also set out a broader vision for what he calls “good growth,” framing it in human rather than purely economic terms, saying: “Ask an economist what growth is and you’ll get a number. But ask the country and you’ll get a different answer.”
He will add: “A young person getting a new job in a company that’s on the up. A sole trader winning a new contract that pays for a holiday with their kids. A business winning a new export order, giving the community around it a new lease of life.”
Treasury officials said Burnham believes he has set out a “clear diagnosis” for the UK’s problems, blaming neoliberalism, de-industrialisation and austerity for “decades of low growth.”
Healey will say: “The solution is a fundamental shift that starts with putting power in the right places. The next chapter of Britain’s growth story will be written in more places.”
The Chancellor will also outline how the newly-formed No10 North fits into his economic plans, describing it as part of a “dual mission” with the Treasury to “drive growth and productivity.”
He will say: “Instead of getting in the way with complexity and red tape, we need a strong, strategic centre wired to enable local leaders and their ambitions.”
Healey added: “I want to see wealth creation in this country. I want to see businesses make a profit. And to create the conditions for that we need an active, accountable state at all levels to remove blockages and create the conditions for more investment.”
The announcement comes ahead of Healey’s first Budget as Chancellor next month, where he faces pressure from business leaders to ease employment costs, reform business rates and lower energy bills.
The Conservatives have dismissed the Chancellor’s speech trail as a “policy-light word salad,” with shadow chancellor Andrew Griffith leading the criticism.
Griffith said: “It will do little to comfort hard-working families and businesses across the country who are worried about more tax rises or the fact that government borrowing rates are near a 28-year high.”
He also raised national security concerns, adding: “We are facing serious threats from Russia and Iran on our doorstep, as well as threats to the Falkland Islands. Yet the Chancellor, the man who resigned over defence spending, seemingly does not want to mention our Armed Forces or how we will reach 3 per cent of GDP on defence.”