(Updates after speech, adds reaction)
By Kylie MacLellan
LONDON, June 23 (Reuters) - Britain will consider building an east-west high-speed railway between cities in northern England to help boost economic growth outside London, finance minister George Osborne said on Monday.
Less than a year away from a national election and with his Conservatives trailing by six points in the polls, Osborne's call to build a "northern powerhouse" will be seen as an attempt to boost the party's appeal in the opposition Labour party's northern heartlands.
"The cities of the north are individually strong, but collectively not strong enough ... So the powerhouse of London dominates more and more. And that's not healthy for our economy. It's not good for our country," Osborne said in a speech in the northern English city of Manchester.
"We need an ambitious plan to make the cities and towns here in this northern belt radically more connected from east to west ... That means considering a new high-speed rail link."
Osborne said the potential link between Manchester and Leeds could be based on the existing rail route, but with trains running faster and with new tunnels and infrastructure.
A connected network of northern cities will provide better jobs and opportunities, Osborne said.
"In the modern knowledge economy, businesses and entrepreneurial types want to flock together more than ever. To form clusters where they can learn from and spark off each other."
Osborne also said the government would support growth in the science and cultural sectors, and look at devolving more power and budget responsibility for cities that wanted a greater say in governing themselves through an elected mayor.
That follows a pledge by Labour leader Ed Miliband earlier this year to boost prosperity outside London by offering to double the spending powers of regions and cities that come up with an economic strategy to generate jobs.
A north-south high-speed rail connection is already planned, with the first leg of the route between London and Birmingham in central England due to be completed in 2026, and an extension to Leeds and Manchester to be finished by 2033.
Work on the north-south line, which has proved contentious due to the estimated 43 billion pound ($73 billion) price tag and a backlash from residents of constituencies along the planned route, is not due to start until 2017.
Business group the British Chambers of Commerce (BCC) welcomed Osborne's proposal as a "good start" but said further connections between other core cities in the north were needed and that the government should first focus on existing plans for road and rail improvements.
"Businesses like this sort of ambitious thinking, but will be far more impressed if the government's existing list of infrastructure commitments are delivered," said Adam Marshall, BCC Executive Director of Policy.
Labour economy spokesman Ed Balls also said more needed to be done to make the most of the already planned route.
"We said months ago that we need value for money for the taxpayer and to improve the existing plans to maximise the benefits for the whole country and strengthen the links between northern cities," he said in a statement.
"Nobody will believe the Tories (Conservatives) can deliver the jobs, growth and investment we need for the north of England. Regional growth divides have widened markedly since 2010."
$1 = 0.5876 British Pounds Editing by Mark Trevelyan and Andrew Heavens