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The UK government will turbocharge a strategic plan to create a British rival to Silicon Valley around Oxford and Cambridge, the latest sign that Labour is focusing on high-productivity areas of the economy in its push for growth.
The decision to back the Oxford-Cambridge Arc marks a return to political favour for a scheme that was shelved three years ago after then Conservative prime minister Boris Johnson prioritised “levelling up” poorer regions.
Science secretary Peter Kyle on Monday said the government wanted to double the economic output of the science-rich region that stretches between Britain’s two best-known universities, with the manufacturing and logistics hub of Milton Keynes in between.
“The Oxford-Cambridge Arc is already an engine of prosperity, but we can go even further. We are determined to unleash research and development as a driving force in our mission to grow the economy in every corner of the country,” he said.
Fast-tracking the scheme to rival the science clusters of Boston and San Francisco in the US would add £78bn of GDP to the UK economy by 2035, according to research by consultancy Public First for the Oxford-Cambridge Supercluster Board, which comprises industry and university leaders.
The announcement, which comes ahead of UK chancellor Rachel Reeves’ “growth” speech this week, was welcomed by the vice-chancellors of Oxford and Cambridge universities as well as senior executives at pharmaceutical company AstraZeneca UK and computer chip designer Arm.
Supercluster board chair Andy Williams said its members, “which include some of the world’s largest investors, see extraordinary potential and in this commitment it is abundantly clear that the government does, too”.
The original plan was devised in 2017 by the National Infrastructure Commission and was a top priority of successive Conservative governments, most recently coming back into favour under Rishi Sunak.
It promised to deliver an extra 1mn homes and 700,000 jobs but met with a fierce political backlash from local groups opposed to new developments.
However, Sir Keir Starmer, prime minister, has signalled that he is prepared to confront such objections, promising to construct 1.5mn homes in this parliament and to “put builders not blockers first” in order to boost the stagnating economy.
Mike Davey, Labour leader of Cambridge City Council, welcomed the backing of the Arc but cautioned that it would require investment in more affordable homes, as well as improved water and transport infrastructure.
“The government should learn from the mistakes the Tories made on the Arc — we need to bring local communities with us and they need to see the benefits,” he said.
No new money was announced for the Arc on Monday. But the government committed in the October Budget to deliver the East West Rail project that will revive the “Varsity” railway, which connected Oxford and Cambridge until it was closed in 1967.
While praising ministers’ ambition for the Arc, senior executives said the plan would require improvements to infrastructure alongside reforms to deliver faster planning permissions, easier access to global workers and capital.
Both Oxford and Cambridge have suffered from shortages of water and electricity that have led to housing and science developments being temporarily blocked by environmental regulators.
Richard O’Boyle, chief executive of Pioneer Group, which runs life sciences campuses, said OxCam could be a big driver of growth “with the right support” but “to fully unlock its potential we need investment, better infrastructure, and policies that support growth”.
In a sign of the difficulties of development in the area, a decision on whether to relocate a sewage works in north Cambridge was delayed for a second time in January, in effect freezing a 5,600-home development.
Nick Pettit, senior partner at real estate adviser Bidwells, said it was a sign of the strength of interest in OxCam that global investors were attracted to the region despite the difficulties with planning and procurement.
“The reality is that small policy changes are all it takes for this region to make an enormous difference to its contribution to national growth,” he added.
The government has said it is committed to investing in regional growth as part of its Industrial Strategy, although offering such high-profile backing to Oxford and Cambridge risks fuelling accusations that the south of England is being favoured in the push for growth.
However, Dan Thorp, chief executive of advocacy group Cambridge Ahead, said backing OxCam was “not a zero-sum game” and that Cambridge was working with other groups, such as the Northern Powerhouse Partnership, to create “connected clusters” that shared in growth.
“The big bang benefit for the government’s growth mission can come from linking what happens in OxCam to the rest of the UK,” he added.
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