Philip Hammond pledges£300m for rail links in show of support for Northern Powerhouse

Addressing delegates, Philip Hammond will announce £400m of investment in the region’s transport infrastructure, including a £300m fund to improve connections to the new HS2 route.

The money comes just over a week since Chris Grayling‘s whistlestop tour of Leeds and Manchester amid the backlash over the Government’s plans to abandon rail electrification schemes. But Labour have dismissed the announcement, arguing that it falls far short of what is needed to reverse years of under-investment.

Mr Hammond’s speech will be delivered to a conference that is set to be dominated by talk of the party leadership.

Theresa May used an interview this weekend to restate her intention to fight the next election, following reports that the Foreign Secretary Boris Johnson is preparing for a final bid to oust her from Number 10.

But in a sign of her weakened position in the wake of June’s election, she yesterday refused to reject the suggestion that Mr Johnson was “unsackable”.

And in a fresh intervention, the former chancellor Michael Heseltine warned tensions between the Prime Minister and Foreign Secretary were “unsustainable”.

Mr Hammond will use today’s address to issue a rebuttal to the Labour leader Jeremy Corbyn, after he launched an attack on the Tories’ “dogmatic” economic policies.

“Our economy is not broken: it is fundamentally strong,” the Chancellor will say. “And while no one suggests a market economy is perfect, it is the best system yet designed for making people steadily better off.”

And following a summer of criticism over the Government decision to row-back rail electrification schemes, he will announce £300m to create connections between the HS2 line and cities not directly on the route.

It is understood this is in addition to £300m set aside to improve local rail services in last year’s budget.

“Poor infrastructure can be a barrier to progress. That’s why, as the party of progress, we are investing record amounts to strengthen transport links,” Mr Hammond will say.

“This investment will go towards ensuring HS2 infrastructure can link up with future Northern Powerhouse and Midlands rail projects – helping the towns and cities of the North reach their full potential.”

Responding to the news, Labour Shadow Chancellor John McDonnell described it as an “insult”. “This really is a drop in the ocean compared to what is actually needed for our creaking railways, roads and infrastructure,” he said.

“After a year in the job, Philip Hammond just wants to continue with the seven years of Tory economic failure that has seen the level of investment in our country fall behind many of our international competitors. “