By Richard Johnstone | 1 July 2014
Labour has pledged to reverse a ‘century of centralisation’ in the control of public spending after backing a review by former Cabinet minister Lord Adonis that calls for more than £30bn to be devolved to councils and Local Enterprise Partnerships.
Publishing the results of the growth review undertaken by Adonis today, Labour leader Ed Miliband said major reforms were needed to ensure every region of Britain could succeed economically.
Speaking in Leeds, he backed the review’s recommendation that strong city and county regions should be created, which could have funding localised to them to tackle regional imbalances in growth.
Adonis concluded that more combined authorities should be created, modelled on those that already exist for Manchester and other core cities, with responsibility for improving skills, infrastructure and economic development.
These bodies would be given greater business rates revenue than is currently given to authorities, holding on to all additional rates generated by economic growth.
Growth in revenue would be offset by reductions in Whitehall grants, Adonis said, but would ensure the income from growth was re-invested locally.
In addition, LEPs would be strengthened to give businesses a direct say over growth strategies and priorities, backed by a substantial single pot of funding to invest in economic development.
The government has pledged to localise £2bn a year to LEPs from next April – following Lord Heseltine's growth review for the coalition – through its growth deals programme.
However, Labour said as much as £30bn could be devolved over five years, covering housing, transport, business support, employment and skills.
Miliband highlighted that independent analysis had found four-fifths of all the new private sector jobs created since 2010 were in London, which illustrated the urgent need for reform.
‘The next Labour Government will ensure city and county regions, like this powerhouse economy in Leeds, get control of business rates revenue, so that any extra money raised here thanks to the efforts of you and everyone in this great city can be invested here.’
Adonis said the review had a simple goal of creating better jobs.
‘Growth is unbalanced,’ he said. ‘The link between growth and living standards has been broken, exports are weak, young people widely lack the opportunities they deserve and inequality is vast, both between people and between regions.
‘Whitehall needs to hand down budgets and powers for this purpose – not just talk about handing them down, as the coalition has done since the Heseltine report. England’s business leaders and local government need empowering to invest in infrastructure, skills and economic development.’
