The government has announced a £400 million investment package to boost development across Cambridge and the wider Oxford-Cambridge corridor.

The development plans to expand housing, infrastructure, and business growth in Cambridge, and form part of a larger £500 million Oxford-Cambridge Growth Corridor project.

The funding was announced by Chancellor of the Exchequer Rachel Reeves, who described the project as an effort to turn “the Oxford to Cambridge Corridor into Europe’s Silicon Valley”. The plans include creating a new centrally-led development corporation in Cambridge to drive growth.

Chancellor Reeves said the lack of public transport, affordable housing, and infrastructure in Oxford and Cambridge “ends under this government”. She added that ministers had “unlocked” £10 billion in private investment to support the development scheme.

Of the £400 million, £15 million will go to the Cambridge Innovation Hub to expand infrastructure for science start-ups.

An earmarked £120 million will reopen the Cowley Branch Railway Line in Oxford, closed for 60 years. Planners said the project could create 10,000 new jobs and homes.

The government will also build on the East West Rail link, connecting Oxford, Cambridge, Bedford and Milton Keynes.

Science Minister Sir Patrick Vallance backed the development, stating: “[The Oxford-Cambridge] region has all the ingredients to be the UK’s answer to Silicon Valley or the Boston Cluster: somewhere that turns world class innovation into economic growth the whole nation benefits from. Today is proof we’ll back the OxCam region to fulfill its enormous potential.”

The investment was also welcomed by several local organisations, including Innovate Cambridge, Anglia Ruskin University, the Arc Universities Group, and Cambridge Ahead.

Dan Thorp, CEO of Cambridge Ahead, said: “Cambridge can only play its national growth mission role if major local infrastructure and housing constraints are addressed. As Lord Vallance said recently, we’d be ‘mad not to’ maximize the potential of this region.”

However, local politicians raised concerns that the benefits of the investment will not be equally received. Sarah Nicmanis, former Green Party parliamentary candidate for Cambridge, said economic growth in the city has not “trickled down”and has widened inequality in Cambridge.

Nicmanis added: “People come from all over the world to visit Cambridge and they have this idea about it being very affluent … but there are many people who don’t have a share in that wealth, who can’t access it.”

Her comments were echoed by Lucy Nethsingha, Liberal Democrat leader of Cambridgeshire County Council, and Paul Bristow, Conservative mayor for Cambridgeshire and Peterborough.

Nethsingha said the investment was important “for the wider UK economy”, but that growth must “benefit and involve local people”.

Bristow backed the investment but said the development must benefit everyone in the city. “If growth is not working for someone who lives in a one-bed flat in King’s Hedges, then we are perhaps doing something wrong,” he said.