The Chamberlain News

Miliband sets Greater Birmingham hare running in return for share of £20bn

Ed Miliband has dramatically hijacked the localisation agenda by promising the biggest devolution of power from central government to England’s “great towns and cities” in a hundred years – but only if neighbouring councils agree to form super-authorities.

Speaking in Birmingham today the Labour leader promised to transfer control of at least £20 billion spent by Whitehall to councils if he wins the General Election.

The figure is double the £10 billion of devolved spend over the course of a parliament already approved by Chancellor George Osborne.

Labour and the Conservatives have traded blows in recent months over moves to stimulate economic growth by liberating cities like Birmingham from the financial shackles of Whitehall.

Last year, the No Stone Unturned report by Tory grandee Lord Heseltine proposed setting up a single pot of about £49 billion to transfer from Whitehall to the regions, but Mr Osborne approved a far less generous scheme of £10 billion.

Mr Miliband’s announcement today appears to open up clear water between the two main parties by promising that under a Labour administration spending decisions on housing, infrastructure and transport and skills would be reallocated to cities and city regions.

The pledge raises the possibility of a Greater Birmingham region, possibly taking in the Black Country councils as well as Solihull, or a region based on the Greater Birmingham and Solihull Local Enterprise Partnership.

Mr Miliband is believed to favour Combined Authorities, similar to Greater Manchester where neighbouring councils join forces to run economic development and transport. Greater Liverpool, West Yorkshire, South Yorkshire and the North-east have either formed Combined Authorities or are in the process of doing so.

The West Midlands, where traditional rivalries between Birmingham and the Black Country persist, has been slow off the mark and is yet to begin the process of forming a Combined Authority. Mark Rogers, Birmingham council’s new chief executive, told Chamberlain News that he would not be pushing immediately for combined authority status and there were other ways for councils and LEPs to co-operate.

Mr Miliband presented his proposals as part of his party’s commitment to end Britain’s “cost of living crisis”. He and shadow chancellor Ed Balls have written to the leaders of every council, university and Local Enterprise Partnership asking them to draw up joint plans to boost growth and private sector jobs in their regions.

Labour’s plans arise from the interim conclusions of a Growth Review led by former cabinet minister Lord Andrew Adonis. City regions that meet “strict tests” established by the Adonis Review will be given new powers over transport and housing infrastructure funding, as well as for the Work Programme and skills.

But the regions will still have to take part in a bidding process, with the Government ultimately deciding which cities receive devolved powers and how much they can spend.

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

Mr Miliband promised: “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.”

Councils which submit plans before the end of the 2015-6 financial year will get a slice of funding as part of a future Labour government’s first multi-year spending review.

Mr Miliband said 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, adding: “We need a prosperous London but we also need to build prosperity outside it.”

Mr Miliband added: “Britain is the country of the industrial revolution and Birmingham was one of the great cities of that revolution. But the country of the industrial revolution has ignored the lessons of its own history for far too long: the country that once built its prosperity on the great towns and cities, like Birmingham, Bristol, Liverpool, Manchester, Glasgow and Cardiff, has become a country which builds its prosperity far too much in one city: London.”

“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 per cent above it.”

Mr Miliband also highlighted five other key planks in the economic agenda has already set out: greater competition in the banking sector to improve lending to business; revolutionising skills and vocational education; removing some of the predatory short-term pressures afflicting great British companies; supporting small firms by cutting business rates; and protecting British exports by staying in the European Union.