'˜Betrayal of the north' as Powerhouse is extended to rest of UK

But shadow home secretary Andy Burnham has attacked the apparent shift in emphasis, accusing the Prime Minister of diluting the Government’s focus on the disadvantaged areas of the North targeted by Mr Osborne’s strategy.

Under the former chancellor, cities in the North of England were offered infrastructure investment and devolved powers in a bid to rebalance the economy away from its dependence on London and the prosperous South-East.

The Prime Minister told key ministerial colleagues at a Cabinet committee meeting on Tuesday that industrial strategy must reach all corners of the country.

And Business Secretary Greg Clark stressed the need to support “cities outside of London” to contribute more to the economy.

Andy Burnham - who is seeking the Labour candidacy for mayor of Greater Manchester - suggested the PM appeared to have “changed her tune” since the Conservatives’ manifesto pledge in May 2015 to build a Northern Powerhouse.

Mr Burnham said that if Mrs May ditched the Osborne plan “it will be the biggest betrayal of people in the North of England since Margaret Thatcher tore the heart out of many of its industrial communities in the 1980s”.

But a Number 10 source insisted that Mrs May was “extending the Northern Powerhouse idea rather than ditching it” and was aiming to create a British Powerhouse.

In Tuesday’s meeting, Mrs May stressed the message, which she delivered on the Downing Street doorstep on her first day as PM, that the Government should focus on delivering “an economy that works for all”.

Ministers agreed that closing the economic gap between different areas of the country should be at the heart of the new Government’s industrial strategy, alongside efforts to increase productivity, champion enterprise, invest in skills and create an economy open to new industries.

Chancellor Philip Hammond noted that halving the productivity gap between London and the South East and the rest of the country could increase GDP by 9%, adding over £150 billion to the economy.

“They agreed that an effective industrial strategy must build on the advantages and recognise the disadvantages of different places, and establish how areas of the country that have not shared in recent industrial success can have a positive economic future,” said a Downing Street spokesman

After entering No 10 Mrs May appointed Andrew Percy, the MP for Brigg and Goole, as Northern Powerhouse minister and the plans were described as a “key government priority”.

In a sign of continuity, Mr Osborne’s former special adviser on devolution, Neil O’Brien, is to join the Number 10 policy unit to lead its work on industrial strategy.