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Miliband backs ‘new generation of Joseph Chamberlains’ in £30bn growth plan

Miliband backs ‘new generation of Joseph Chamberlains’ in £30bn growth plan

🕔01.Jul 2014

Labour leader Ed Miliband upped the devolution stakes dramatically today, promising to distribute £30 billion of economic growth money to powerful city and county regions if he wins the General Election.

Mr Miliband promised to reverse a century of Whitehall centralisation by empowering councils and Local Enterprise Partnerships to tackle the “chronic problems of poor skills, infrastructure and economic development”.

He accepted recommendations from a review by Lord Andrew Adonis, which called for the creation of a “new generation of Joseph Chamberlains, strong far sighted city and civic leaders with bold, credible plans, for their localities”.

At the heart of Labour’s plan lies a commitment to devolve more than £30 billion to combined authorities, existing local authorities and LEPs over the course of a parliament.

The new city region bodies will be able to keep revenue from increased business rates, but will lose central government grants – a proposal that Mr Miliband said would be cost- neutral.

The £30 billion figure is three times as much as the Government’s Local Growth Fund and would be invested in housing, transport, business support, employment and adult skills.

Mr Miliband’s pledge means that Labour and the Conservatives will fight the next election committed to unprecedented levels of devolution across England. George Osborne, the Chancellor, has said he wants to increase the Local Growth Fund to at least £20 billion.

The devolution hare started to run in 2012 when Tory grandee Lord Heseltine produced his ‘No Stone Unturned’ report which recommended setting up a £60 billion single pot local growth fund. Heseltine worked with the Greater Birmingham and Solihull LEP to see how his regeneration plan would work in practice.

Both parties are stressing that they want to see the creation of more combined authorities, like Greater Manchester, to work with LEPs on economic regeneration.

But the notion of a Greater Birmingham authority has created friction in the West Midlands where age-old rivalries and suspicion between Birmingham and the Black Country are still apparent today.

Council leaders are edging towards closer co-operation, with the region’s LEPs often working together on cross-boundary strategic issues, but the formation of a Greater Birmingham combined authority is not on the agenda at the moment.

The Labour leader, speaking in Leeds, said he was determined to mend long term fractures in Britain’s economy which had been untreated for too long.

Describing his party as “One Nation Labour”, he set out a vision for “a new era of shared prosperity through big reform, not big spending”.

Labour said Mr Miliband’s proposals would mean:

  • More combined authorities modelled on Greater Manchester to tackle the chronic problems of poor skills, infrastructure and economic development.
  • Stronger Local Enterprise Partnerships, giving businesses a direct say over growth strategies and priorities, backed by a substantial single pot of funding to invest in
  • A long-term innovation strategy in science and research to create new products and improve the UK’s record of underinvestment in R&D.
  • A long-term national funding framework for innovation policy, giving small innovative firms greater access to government research budgets for all departments.

The Adonis Review makes a series of recommendations for using the power of government to nurture the growth of small businesses and support exporters. These build on policy already announced by Labour and are being developed by the policy review for the next manifesto.

Proposals include setting a target for 25 per cent of all Government procurement contracts to go to SMEs both directly and through supply chains and establishing a new Small Business Administration whose primary task would be to drive policy and practice to meet this target, as well as providing support for SMEs across government.

Labour would also create a regional network of small business investment companies alongside regional banks.

The Adonis Review makes further recommendations to address the UK’s near record levels of youth unemployment and persistent skills shortages.  Measures being considered include:

  • Expanding high quality apprenticeships – with a threefold increase in those for school leavers in Science, Technology, Engineering and Maths.
  • Establishing at least 100 new University Technical Colleges and creating an organisation for successful career switchers to teach maths and science.

Mr Miliband said: “There are long-standing problems in our economy which we have known about for decades but not tackled.

“The global financial crisis represented a moment when the tide went out and the rocks hidden beneath were exposed.

“These problems began long before the crash and will not be solved simply by the belated end of the recession.

“Our response must be to grow the wealth of our country – not by big spending – but by big reform of our economy.

“It is a One Nation vision. If we are to create the wealth of the future and solve the cost of living crisis, we must help create high-quality private-sector jobs not just in one part of Britain, but in every part of Britain.

“Independent experts say four fifths of all the new private sector jobs created since 2010 are in London. We know that’s not good enough.

“The Adonis Review sets out plans to devolve £30 billion worth of funding.

“And the next Labour Government will ensure city and county regions, like this powerhouse economy in Leeds, get control of business rates revenue.

“I know the next Labour Government cannot solve every problem by pulling levers in Whitehall.

“We can only do it by working with, harnessing the energy, the ideas and the dynamism of great businesses, cities, county regions – and you.”

Lord Adonis said: “My review has a simple goal: creating better jobs in your area.

“Britain’s industrial revolution changed the world. Innovation in technology, production and manufacturing transformed the lives of millions, first in Birmingham, Manchester, Leeds, and other towns and cities, and then beyond our borders. Having once led the world, Britain is struggling to keep up.

“On education, infrastructure, regional growth, productivity and living standards, the UK lags much of Europe and North America. Having once been the world’s dynamo of new products, ideas and processes, British firms struggle to grow, find the skilled workers they require, and export.

“Growth is unbalanced. 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 governments need empowering to invest in infrastructure, skills and economic development.

“While big numbers dominate discussions about economic growth, the real story exists in the company, or the cluster, or the school, or the city.

“My overriding aim is to promote a smarter, not a more expensive, state. We need to build on the best of Britain and be optimistic that the best is yet to come.”

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