Labour plans 'city region' powers

Ed Miliband is promising to

Ed Miliband is promising to "reverse a century of centralisation"

First published in National News © by

A new generation of more powerful "city regions" would be created by Labour in England to rebalance the economy away from London and share the benefits of growth, Ed Miliband said.

Up to £4 billion a year extra - twice what the Government proposes - could be switched from Whitehall control as areas take charge of housing, transport and skills provision, the party's manifesto will promise.

The party has issued appeals to councils to join forces along with universities and existing local enterprise partnerships to draw up blueprints for a private sector-led expansion of employment in their areas.

Those that are approved within nine months if Labour takes power in 2015 would qualify for the powers under a policy based on the findings of a growth review led by former cabinet minister Lord Adonis.

Mr Miliband, making a speech in Birmingham, said ministers had "flunked" the chance to boost other parts of the country by failing to implement devolution proposals in a Government-commissioned report by Lord Heseltine.

Labour would push ahead and "reverse a century of centralisation", he said, urging English cities to draw on the examples of those in Germany and elsewhere in challenging the dominance of the capital.

"Cities and towns that agree to come together with local businesses to plan for their economic future will be given historic new powers over funding for infrastructure, skills and economic development," he said.

"They will be able to invest directly in transport and housing, as well as having greater say over skills, with local businesses for the first time controlling the funding of apprenticeships.

"They will also lead on delivering the Work Programme with city - and county - regions able to use their local knowledge to decide which providers to use to get people back to work.

"And towns and cities will be given clear incentives too, by being able to share in the proceeds of growth in their area.

"With power of this sort comes responsibility. These changes will only bring new jobs, greater prosperity, if the towns and cities are willing to put the private sector at the heart of decision making.

"So today, Ed Balls and I have written to every local government leader, every local enterprise partnership and every university asking them to work together and prepare for the next Labour government as part of our plan to close Britain's productivity gap."

Mr Miliband said Britain "will never be able to tackle the cost of living crisis and create the new jobs that are essential to it" without breaking the dominance of London, which was responsible for more than half of growth since 2010.

"We need a prosperous London, but we also need to build prosperity outside it. Today, every region outside London is below the national average when it comes to productivity, while London is 40% above it."

Attacking the Tories for failing to take devolution seriously, he will say: "Michael Heseltine's review called for a massive devolution of funding from Whitehall to the cities.

"But David Cameron and George Osborne allocated just £2 billion for a local growth fund in their spending review for 2015-16. The best report this Government has produced has been the one that they have most ignored.

"We can and must do a lot better than that."

Conservative Party chairman Grant Shapps said: "Once again Ed Miliband is talking about a problem which the Labour government that he was at the centre of created.

"Labour's great recession made people who work hard poorer, and their unbalanced economy saw just one job created in the North and Midlands for every 10 created in the South.

"Our long-term economic plan to secure a better future for the whole of Britain is about creating jobs in every part of our country, meaning more people having the security of a regular pay packet. That's the only way to raise living standards for everyone.

"But Ed Miliband has no plan. All he offers is short-term quick fixes, and more spending, more borrowing and more taxes. That's exactly what got us into a mess in the first place, and hard-working people will pay the price with a less secure future."

The proposal was welcomed by the Core Cities Group, which has been pushing for a significant extension of powers to England's biggest urban areas, including direct control of property taxes.

Sir Richard Leese, leader of Manchester City Council, said: "The Core Cities urban areas deliver 27% of the English economy, more than London, but still underperform by international standards.

"Independent forecasts for our cities demonstrate that, with more local freedom, we could deliver an additional £222 billion and 1.3 million jobs into the economy by 2030. We therefore welcome the direction of travel set out in the statement by the Labour leader today."

Professor Philip Booth, editorial and programme director at the Institute of Economic Affairs, said: "Ed Miliband is right to suggest that the UK has over-centralised government.

"But simply decentralising more spending decisions without also decentralising tax-raising powers risks creating perverse incentives and continued interference from Whitehall on what the aims of spending should be."

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