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London's major redevelopment around Battersea Power Station was given a huge boost today as the Chancellor moved to ensure it is on the Tube network.

Hailing the massive scheme as equivalent to the Olympic Park in importance, George Osborne announced a funding plan for the long-awaited Northern Line Extension. Two new stations at Nine Elms and Battersea Power Station will be opened.

“I today confirm a billion pound loan and a guarantee to extend the Northern Line to Battersea Power Station and support a new development on a similar scale to the Olympic Park,” the Chancellor said.

The Treasury will provide a guarantee that allows the Greater London Authority to borrow up to £1 billion from the Public Works Loan Board, at a preferential rate, to finance the construction of the line.

Boris Johnson was delighted, saying the area had the greatest potential for growth in the capital since Canary Wharf. The Mayor aims to create around 16,000 new homes and up to 25,000 jobs in the area.

“I am delighted that after months of intensive discussions and hard work we have got the go-ahead from Government on financing an extension to the Northern Line,” he said.

“It will be an incredible confidence boost for developers preparing to invest there and it will also be a considerable boost for local people who will benefit from the new Tube link.”

The Government is to designate an enterprise zone on the site.

Other measures today for London included £600 million to build just over 20,000 affordable rented homes, an £85 million partnership between UCL and Great Ormond St Hospital; £60 million for a National Research Centre for Structural Integrity to be developed at Brunel University; £150 million for a new Imperial College campus near White City.