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Chancellor of the Exchequer George Osborne has used his Autumn Statement to confirm plans for a new sovereign wealth fund for the North of England.

Speaking to a packed House of Commons the Chancellor said the new fund would use tax receipts from the exploitation of shale gas reserves in the North of England to invest in economic development projects in the region.

The new fund is the latest in a series of government announcements designed to create a Northern Powerhouse economy in the North of England. The measures are designed to re-balance the British economy away from its over-dependence on London and the South East.

Speaking during his last Autumn Statement before the next General Election, Mr Osborne said: “We’re announcing a new sovereign wealth fund for the North of England so that the shale gas resources of the North are used to invest in the future of the North.”

The fund will be created once shale gas extraction commences. Estimates suggest 1,300 trillion cubic metres of shale gas reserves lie beneath the ground in the North of England.

Other announcements designed to boost the Northern economy include extra government money to replace “ancient and unpopular pacer carriages” used on the Transpennine Express, which runs out of Liverpool Lime Street, with new and modern trains.

The next Transpennine franchise will deliver at least a 20% increase in capacity to reduce overcrowding, bring all the trains that remain up to modern standards, provide additional services across the network, provide faster services on some of the busiest routes, and deliver substantial upgrades of station facilities across the network.

The Chancellor also unveiled a range of new investments in science and technology research. Liverpool will be home to a satellite branch of the new £235m Sir Henry Royce Institute for advanced materials research and innovation, which will be based in Manchester. There will also be a new £113m Cognitive Computing Research Centre in Daresbury near Warrington.

The Chancellor used his speech to say that his door would always remain open to any cities that wanted to bid for a similar city deal to the one awarded to Greater Manchester last month, which sees hundreds of millions of pounds of public spending decisions devolved to a combined authority led by an elected mayor.

Liverpool City Region Combined Authority chairman Phil Davies said that the area’s six local authorities planned to approach the government about greater devolved powers.

Cllr Davies said: “The City Region has proposed a series of steps towards devolution that we believe would help rebalance the UK economy, reduce government spending and enhance the growth potential of the entire North of England.

“The Chancellor’s announcement to include additional Combined Authorities in the devolution process is just the beginning. The Liverpool City Region has already started informal discussions to take back the decision-making over how our communities develop and progress and we look forward to meeting with the Chancellor in the future.

“It is time for the Government to deliver on its promises to the North and devolving power to the regions is the first step.”

Plans revealed in the Autumn Statement come on top of announcements to boost the North’s economy made earlier this week. These include extra spending on road and rail connections, including around the Port of Liverpool.

However, one local business leader expressed his disappointment that the Chancellor’s speech included no reference to extending HS2 or HS3 into the city.

Martin Heath, accountancy firm PwC’s senior partner in Liverpool, said: “Today’s announcement is a strong signal of intent and a clear indication of what might be on the cards for the Northern cities.

“The investment into tackling the region’s transport system is a major step forward in enabling the region to fulfil its economic potential, but it is short-sighted and disappointing that Liverpool remains out of the frame for both HS2 and HS3 rail links.

“The North has long been calling for better connectivity between cities outside London. The fact it takes three and a quarter hours by passenger train to travel about 130 miles between Liverpool and Hull is clearly not good enough and the focus on East to West connectivity is long overdue. We now need to build on this momentum and push harder on the timescales.”