The government has unveiled a major package of investment for Northern England, framed as the next phase of its Northern Growth Strategy. The measures form part of a wider economic plan centred on stability, investment and reform, and follow the Chancellor's Mais lecture earlier in the week.
For the first time, a UK government is building a national economic plan around regional industrial strengths, devolved multi billion capital funds, and sector specific missions. The announcement marks a structural shift in how regional growth is being treated, not as a corrective policy for lagging areas, but as a core engine of national economic performance.
Key Points
- £2.3 billion in new City Investment Funds announced
- Up to £1.7 billion directed to major Northern city regions
- Targeted investments in digital, quantum, defence and innovation sectors
- Funds flow directly to mayors for local delivery
- A more detailed Northern Growth Strategy will be published in the autumn 2026
What Is the Northern Growth Strategy?
The Northern Growth Strategy is the government's plan to build long term economic strength in Northern England by investing in the industries and sectors where the region already has recognised strengths. Rather than treating the North as a problem to be fixed, the strategy frames it as an economic asset to be developed.
The Chancellor set out the broader economic context in her Mais lecture earlier this week, arguing that in a period of global uncertainty, the UK's best route to secure and resilient growth is through increased public and private investment and a more active, strategic state. She identified three national growth priorities:
- Empowering regional growth
- Embracing AI and innovation
- Establishing a closer relationship with the EU
The investments announced on 18 March 2026 represent the next step in delivering the first of those priorities.
The Headline Figures
The total package announced comprises £2.3 billion in new City Investment Funds. Of this, up to £1.7 billion is directed to major Northern city regions. The remaining allocations cover the West Midlands and other areas through the Housing Accelerator Fund.
In addition to the City Investment Funds, a series of targeted sector investments were announced:
- £51 million for a National Cryogenics Facility at Daresbury in the Liverpool City Region
- £50 million for the South Yorkshire Defence Growth Deal
- Hundreds of millions for a new Manchester Digital Campus
- £50 million from Greater Manchester's Local Innovation Partnerships Fund award
- £30 million from Liverpool City Region's Local Innovation Partnerships Fund award
- More than £150 million from the British Business Bank for high potential Northern companies
Sector Specific Investments Across the North
Manchester - Digital, AI and Government Hub
Hundreds of millions of pounds will be invested in a new Manchester Digital Campus. The campus will house 8,800 civil servants and ministers, consolidating existing government estate and reducing long term costs to the taxpayer. It will be built on a disused brownfield site in the Ancoats area of Manchester city centre, supporting regeneration of the area.
The campus is intended to reinforce Manchester's position as a national centre for digital and AI activity. Greater Manchester already has one of Europe's fastest growing digital and tech economies and the largest AI sector by headcount outside London.
Greater Manchester will also deploy its £50 million Local Innovation Partnerships Fund award on health innovation and life science, advanced materials and manufacturing, and applied AI.
Liverpool City Region - Quantum and Cryogenics
£51 million will fund a new National Cryogenics Facility at Daresbury in the Liverpool City Region. The facility will support ultra low temperature research for sectors including quantum technology, healthcare and fusion energy. It is expected to attract private R&D investment and position the North West as a global hub for quantum technology companies.
Liverpool City Region will also deploy its £30 million Local Innovation Partnerships Fund award, targeted at materials chemistry, infection prevention and control, and artificial intelligence.
South Yorkshire - Defence and Advanced Materials
£50 million has been confirmed for the South Yorkshire Defence Growth Deal. This will support research, development and engineering of advanced materials critical to the next generation of defence capabilities. The investment is intended to anchor long term industrial activity across Sheffield, Rotherham, Doncaster and Barnsley.
West Yorkshire - Financial and Professional Services
The Office for Investment will work to attract global financial services companies to West Yorkshire's "Northern Square Mile", championing the region's strengths in FinTech, legal services and accountancy.
Business Growth Across the North
The British Business Bank will invest more than £150 million into high potential companies in Northern clusters. It is also developing a strengthened local growth network to connect scaling businesses across the country to the investment they need.
City Investment Funds: How They Work
The City Investment Funds combine grant, loan and patient capital, flowing directly to elected mayors to support local delivery. This structure is designed to give city regions greater control over how and where investment is deployed, with the aim of speeding up decision making and delivery.
The funds build on the £500 million Mayoral Revolving Growth Fund announced the previous year.
The total £2.3 billion package is split across two components:
1. Housing Accelerator Fund - £1.5 billion
Available to all seven established Mayoral Strategic Authorities (MSAs). Final allocations will be determined based on the readiness of development pipelines and alternative funding options available to each area. The fund is intended to accelerate housing delivery and unlock stalled development sites.
2. City Densification Fund - £800 million
Available to five Northern MSAs and the West Midlands. Of the £800 million total, £620 million goes to the five Northern city regions. The fund is designed to increase density in city centres, unlock regeneration schemes, and expand housing and office space.
What the Chancellor Said
"For too long the North has been sidelined, denied investment and had its potential held back. Backing its industrial strengths like Manchester's thriving digital sector and Sheffield's cutting edge defence manufacturing will boost the region's economy and place it at the centre of our national growth. In a changing world we have the right economic plan: stability, investment and reform to build a stronger more secure economy."
Chancellor of the Exchequer Rachel Reeves made the announcement following her Mais lecture, in which she argued that only through stability, investment and reform can the UK protect its economy from global shocks and drive growth in every part of the country.
Regional Leaders' Responses
Andy Burnham, Mayor of Greater Manchester, said:
"By backing the North's industrial strengths the Chancellor is getting behind our plans to re-industrialise the birthplace of the Industrial Revolution. Manchester city centre is home to our thriving digital, cyber and AI cluster, with one of Europe's fastest growing digital and tech economies and the largest AI sector by headcount outside London. The Manchester Digital Campus will put us among the world's top tier of tech cities, creating high value jobs for our residents and opportunities for our businesses. We're ready to work with Government to deliver the project as we bring about a new decade of good growth in Greater Manchester."
Steve Rotheram, Mayor of the Liverpool City Region, said:
"Today's announcement is a real vote of confidence in the North and in places like the Liverpool City Region that have the talent and ambition to lead the way. We're already building something special here and backing projects like the new national cryogenics facility at Daresbury puts us right at the forefront of the global quantum race, bringing high quality jobs and investment into our area. This is exactly what we've been arguing for a long time: backing our strengths and trusting local areas to deliver. Because when decisions are made closer to the people they affect, you get better, faster results."
Oliver Coppard, Mayor of South Yorkshire, said:
"We're building a bigger and better economy across all of South Yorkshire, creating the opportunities that allow people to stay near and go far. This week the Chancellor has shown that this Government is right behind us in that mission. The confirmation of £50 million for our Defence Growth Deal is a huge vote of confidence in the work we do here in South Yorkshire and our contribution to the security of this country."
Tracy Brabin, Mayor of West Yorkshire, said:
"People want to see more jobs and opportunities created on their doorstep, so I share the Chancellor's ambition to build on the emerging successes being driven by devolution in places like Leeds and Manchester. This funding to help drive growth in our biggest job creating industries, including our world leading health technology sector and our Northern Square Mile of financial and professional services, is a vote of confidence in our ambitious plans for the region."
What Happens Next
The government has confirmed that a more detailed Northern Growth Strategy will be published in the autumn of 2026, developed in partnership with mayors, local leaders and businesses. The investments announced this week are described as the first phase of that wider plan.
The strategy sits alongside the government's broader Industrial Strategy, which focuses on eight growth driving sectors, and Northern Powerhouse Rail, which is intended to improve transport connections between the Northern cities where these industries are located.