Labour plans to boost English cities: the battle for the regions begins

Ed Miliband has accepted recommendations in a report by Andrew Adonis for invigorating business in English cities and fighting “chronic regional imbalances” in economic growth.

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Today, the Labour leader will announce his party’s plan for “shared prosperity” by challenging the London bias in economic growth and innovation. He is proposing to devolve more power and give more money to other English cities and their surrounding regions.

The plans come from a review by former transport secretary Andrew Adonis, and respond to the concern that four out of five new jobs in the past four years have been created in London.

The basic idea is to allow councils to control how they spend any additional income they receive from business rates: ie, money raised locally spent locally. Miliband will also add that Labour could devolve up to £30bn in funding for regional enterprise.

Miliband will say at a speech in Leeds that councils, if they cooperate with each other, can become “economic powerhouses”. This is an echo of the Chancellor George Osborne’s language last week, when proposing his plan for “HS3”, saying we need a “northern powerhouse.” The battle for the regions has commenced.

An interview with Adonis broadcasted on the Today programme this morning pointed out that his plans for the regions echo those of Conservative Michael Heseltine’s regional growth plan, which has been accepted by Osborne.

Adonis conceded that their analysis of the problem – that there is a geographical imbalance in economy growth – is similar, and that “we broadly agree” when it comes to “creating really strong powerful cities and regions.”

However, Adonis pointed out on the programme that Labour’s plans differ in that they include allowing cities and county regions to keep more of their tax revenues, in return for “taking serious responsibility for planning and delivering infrastructure and of course increasing it”.

It seems there is at least a general political consensus that the regions should be helped to grow, and that prosperity must be extended beyond London’s borders – and it’s the similarity of the parties’ diagnosis of the problem that will make this such an interesting battleground for policy proposals.

Adonis said it all when he commented on Today that the question is: “Who’s going to act rather than just make speeches?”

Both parties have been paying lip service to rescuing the regions for a while, but the gap between north and south is far from closing.

Adonis’ argument is that Miliband’s speech suggests action because of Labour’s “preparedness to devolve tax resources” – an approach the Conservatives aren’t taking, preferring to create a single pot of money especially for funding regional growth.

The Tories have dismissed Adonis' plan as “same old Labour” using extra tax revenue as a solution. A predictable criticism, but there is a grain of concern there. Labour needs to prove to businesses that it’s onside, as Nick Robinson points out, and although these new plans to innovate business have been welcomed by the CBI, such a wholesale shake-up of tax plans could cause businesses uncertainty.

Anoosh Chakelian is senior writer at the New Statesman.