UK Politics

Labour pledges funding boost for English cities

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Media captionEd Miliband offered a "new bargain" to town halls

Labour has promised English cities more powers over transport, housing and employment to help close the "productivity gap" with London.

If elected, the party would hand £20bn to councils to spend on skills, back-to-work schemes and infrastructure, leader Ed Miliband said.

Local authorities would have to bid for cash and put private sector jobs first.

Speaking in Birmingham, Mr Miliband said the UK needed to "build prosperity" outside London.

The coalition government has introduced Enterprise Zones, City Deals, Local Enterprise Partnerships and the Regional Growth Fund since 2010 in an effort to boost economic development in the English regions.

But a recent report by the public spending watchdog suggested that of the £2.6bn allocated through the Regional Growth Fund, only £492m had so far actually reached projects.

Jobs push

Mr Miliband claimed the government had missed the opportunity to give English towns and cities the economic levers they needed to generate new jobs.

Announcing the results of a review by the former Transport Secretary Lord Adonis, Mr Miliband said a future Labour government would invite every local authority, local enterprise partnership and university to work together in partnership with local businesses to bid for resources.

He claimed the doubling of existing devolved funding would amount to the "biggest devolution of powers to towns and cities in a hundred years".

Councils which submit plans before the end of the 2015-16 financial year would get a slice of funding as part of a future Labour government's first multi-year spending review.

The powers which could be handed over include control over apprenticeship budgets and local delivery of the Work Programme - including the power to choose private sector providers.

Councils would need to show they could meet certain criteria and that their economic strategies were predicated on creating high-skilled, well-paid jobs in the private sector.

"Each and every authority which can bring forward plans of this sort... will receive powers and access to resources from Whitehall the like of which we have not seen in living memory," Mr Miliband said.

'Breaking the pattern'

Labour also promised to create nine ministers, each representing a region of England.

Shadow Cabinet Office minister Michael Dugher said these would "help to shape policy around local and regional interests with a view to correcting the regional inequalities that have arisen".

Mr Miliband suggested the transfer of "real powers" to towns and cities was essential to rebalance the economy and stop the output gap between London and the rest of the country widening.

"We need a prosperous London but we also need to build prosperity outside it," he said.

"Today, every region outside London is below the national average when it comes to productivity, while London is 40% above it."

"Britain will never tackle the cost-of-living crisis and create the new private sector jobs that are essential to doing so unless we break this pattern, reverse a century of centralisation, and change from an economy based on the success of one city to all of our country's great towns and cities."

The government has agreed to give new powers to eight of England's largest cities and is in process of negotiating City Deals with a further 20, based on fostering job creation, deregulation and business growth.

Ministers say they have followed through on the recommendations of a 2012 report by former Deputy Prime Minister Lord Heseltine which called for £49bn in resources to be transferred from Whitehall to the regions.

But Labour has accused the government of "ignoring" the report.

Katja Hall, chief policy director of the CBI employers' group, said: "The focus should be on getting Britain building to lay the essential foundations for growth - better roads, train links, more high-speed broadband and more housing.

"Local leaders also have a key role to play in mapping local skills shortages but employers should be in the driving seat when it comes to funding."

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