Labour is calling on local councils in England to come together to form a series of “regional economic powerhouses” in an effort to boost growth and close the “vast ” inequalities in wealth between the different parts of the country.
Ed Miliband will use a speech in Leeds today to call for the creation of more “combined authorities” – like that which already exists in Greater Manchester – to tackle entrenched problems of poor skills, infrastructure and economic development.
He will say that under a Labour government, the combined authorities would receive any additional business rate revenue generated by growth to reinvest locally.
While party officials said the measure would be “revenue neutral” – being offset by reductions in other grants – it would ensure that any additional revenue created would stay in the region.
The plan is one of a series of recommendations in a review into ways generating growth carried out for Mr Miliband by the former transport secretary, Lord Adonis.
In all, Labour said that under Lord Adonis’s proposals, more than £30 billion could be devolved to local authorities – including combined authorities – and local enterprise partnerships over the course of a parliament.
This would include funding for housing, transport, business support, employment and adult skills.
In his speech, Mr Miliband will say: “The next Labour government will ensure city and county regions, like this powerhouse economy in Leeds, get control of business rates revenue so that any extra money raised here … can be invested here.
“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.”
Other proposals in the Adonis report being considered by Labour include the creation of at least 100 new university technical colleges, expanding apprenticeships and establishing a long-term innovation strategy in science and research.
Lord Adonis said his aim was to promote “a smarter, not a more expensive, state”.
“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,” he said.
“England’s business leaders and local governments need empowering to invest in infrastructure, skills and economic development.”
Lord Adonis’s proposals received a cautious welcome from business leaders.
Adam Marshall, policy director at the British Chambers of Commerce, welcomed the call for more power and funding to be devolved from Whitehall but said that accountability to local business needed to be strengthened.
“Decisions on local growth are best taken when businesses and councils decide what arrangements work best for their areas, and deliver these accordingly,” he said.
“In a world where more funding and tax revenues are devolved, however, businesses need the strongest possible say over both local economic plans and how money is spent.”
Terry Scuoler, chief executive of the EEF manufacturers’ organisation, said the review represented a step in the right direction, but there were questions as to how it would be implemented in practice.
“Devolving an additional level of funding before local structures for growth have been properly tested runs the risk of greater strain being placed on local enterprise partnerships and other local bodies,” he said.
“This pressure could inevitably see local plans being driven by central government targets.”
For the Conservatives, Business Minister Matthew Hancock said: “Labour are planning tax rises on businesses, tax rises on jobs, and yet more government borrowing – risking wrecking our economy all over again.
“It’s just the same old Labour: Ed Miliband has no plan for our country’s future, can’t stand up to his union bosses, and is simply not up to the job.”