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UK Treasury chief outlines plans to link northern cities to create second British power centre

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LONDON - Britain's Treasury chief on Monday made the case for better connecting the cities in northern England to create a second economic powerhouse to rival London, unveiling a plan to build new railway lines, pool resources and boost investment.

George Osborne, whose proposal includes a high-speed train link between Manchester and Leeds, said northern cities will be able to better compete with the capital for investment if they combine their resources.

"The powerhouse of London dominates more and more. And that's not healthy for our economy," he said in a speech. "It's not good for the country."

The new plan comes as policymakers attempt to address the growing economic divide separating London from the rest of Britain. The economy of Britain's South East region has expanded almost twice as fast as the rest of the country since the 2008 financial crisis.

The challenge has been to create a magnet elsewhere to draw the talent and expertise that gravitates toward London. Focusing on rail links, universities, culture, science and other drawing points, Osborne said a new economic hub in the north would capitalize on the fact that cities create "clusters," that draw professionals to "spark off each other," — such as California's Silicon Valley.

"All this requires scale," he said. "You need a big place, with lots of people. Like London."

Restoring the fortunes of the once-powerful north is also central to Prime Minister David Cameron's political future. With an election just a year away, Cameron's Conservatives are trying to broaden their base into traditional Labour Party strongholds outside southeastern Britain.

The speech also marks an important departure in the longstanding debate in Britain about how to have the nation share in the fruits of economic success. In a country where equity is considered a valued ideal, there's been uneven political will to focus on a single area as a target of growth — rather than multiple regions.

"What we heard today is a departure," said Mike Emmerich, a chief executive of the Manchester think-tank New Economy. "It was the first explicit acknowledgement that the big cities ... They matter. Connectivity between them matters. If we get them right, it will power the north."

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