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Miliband shows his hand on English devolution

Labour leader promises to end a "century of centralisation" by giving city regions major new powers and funding.

Labour leader promises to end a "century of centralisation".
Ed Miliband speaks at the Scottish Labour conference on March 21, 2014 in Perth. Photograph: Getty Images.

Ever since Ed Miliband declared his support for localism in his Hugo Young memorial lecture, Labour figures have been looking for concrete evidence of his commitment to devolving power from Whitehall. It was one of the motivations behind the recent letter to the Guardian from left-wing think-tanks which called for "devolution of state institutions, by giving away power and resources to our nations, regions, cities, localities and, where possible, directly to the people."

In a major speech on the economy tomorrow in Birmingham, Miliband will go a significant way to meeting their demands. Announcing the interim conclusions of Andrew Adonis’s growth review, he will vow to end a "century of centralisation" by at least doubling the level of devolved funding to city and county regions to £20bn over the next parliament (a figure that Labour sources emphasise is the "bare minimum"). As one shadow cabinet member recently put it to me, to see the party's commitment to devolution, "follow the money". Alongside this, regions will be offered new powers over transport and housing infrastructure, the Work Programme, and apprenticeships and skills, a move described by the party as "the biggest devolution of power to England’s great towns and cities in a hundred years".

Miliband and Ed Balls are to write to the leaders of all local authorities, universities and Local Enterprise Partnerships asking them "to draw up joint plans to boost growth and private sector jobs in their regions." Those regions that bring forward plans in the first nine months of the next parliament, and that meet the tests set by the Adonis review, will receive a "devolution deal" in the first spending review period of a Labour government.

The aim of the policy is to bridge the huge productivity gap between London and the regions (thus rebalancing the economy), and to create the kind of high-skilled, well-paid jobs lacking in so many areas. As Miliband will say tomorrow: "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% above it."

Given the fiscal constraints a Labour government would face, Miliband is clear that it is the private sector, not the state, that will be the primary source of new jobs. After addressing prices (with announcements on energy and housing) and wages (by promising to strengthen the minimum wage and spread use of the living wage),  Miliband's focus on employment is the next strand of his plan to tackle the "cost-of-living crisis" (see my blog from this morning on why he's sticking with this line).

In his speech, he will contrast his commitment to devolution with the inaction of the coalition. Referencing Michael Heseltine's government-commissioned growth review No Stone Unturned (which was similarly launched in Birmingham), he will say: "This government had an opportunity to make a difference. 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. It is why nine months ago, I asked Andrew Adonis to recommend the way forward for Labour. We have heard his interim conclusions today and his message is clear: devolving power from Whitehall to our towns and cities is essential to generate the new jobs we need."

It would be fascinating to know what Heseltine, who shared a platform with Adonis at an event on London last week (the two are long-standing mutual admirers), makes of Labour's decision to go far further than the Tories in embracing his conclusions. Perhaps he'll be kind enough to tell us...

One other figure closely involved in the speech was Chuka Umunna (another Heseltine fan), who made the case for regional economic devolution in a piece for Centre for Cities in February, and who, along with Jon Cruddas, Liz Kendall and Hilary Benn, is the most fervent advocate of localism in the shadow cabinet. His "Agenda 2030" is crucial to Miliband's ambition to build "a different kind of economy".

Having so clearly recognised the merits of devolution, Miliband will now be pushed to go further, for instance by devolving housing benefit (allowing councils to invest any savings in housebuilding) and lifting the cap on council borrowing to allow local authorities to borrow to build. But those who have previously doubted his commitment to giving power away, will welcome tomorrow's speech as a significant downpayment.