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The forthcoming Regional Growth Fund will be extended by another year, adding £400m to the original £1bn budget and will be used to match European Regional Development Fund money "wherever possible", chancellor George Osborne said in his spending review speech to Parliament.
The Regional Growth Fund, to be chaired by Lord Heseltine, will run from 2011 to 2014 and have a budget of £495m in the first year, £505m in the second and £420m in 2013/14.
There was only a passing mention of the Local Enterprise Partnerships being brought in to replace Regional Development Agencies in Osborne's speech and accompanying papers published this afternoon. The local growth White Paper "will be published shortly" with more details on LEPs, planning reform and regional policy.
As predicted, the Mersey Gateway second bridge over the river between Cheshire and Liverpool will be funded, as will rail station and network improvements around Manchester.
Osborne said budgets for infrastructure, health, education and science funding would all be protected.
The average departmental cut across Government is 19% over the next four years, Osborne said.
John Ashcroft, chief executive of Pro Manchester, said: "It's a benchmark day. The waiting is over, and uncertainty has been inhibiting growth.
"All the nonsense about back from the brink of bankruptcy can be put to bed. It is not as bad as we thought, there's going to be spending on schools and hospitals."
Andy Delaney, director, public sector consulting at the Manchester office of property agents Colliers International: "More than 40% of all public sector employment is located in just a quarter of local authorities in the UK. It will be these authorities that are at particular risk.
"In the North West, there are particular concentrations in Merseyside, Manchester and parts of Lancashire and there is bound to be a knock-on effect to the property market in these areas."