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Labour plan to give power and money to English cities Labour plan to give economic power to English cities
(about 11 hours later)
Labour is proposing to give more power and money to English cities outside London and the regions around them. Labour leader Ed Miliband has set out plans to shift economic power in England from London to the regions.
Under its plans, councils would get to control how they spend extra income generated from business rates. Under a Labour government councils would be encouraged to join forces to create regional "economic powerhouses" to attract more jobs and boost growth, he said in a speech in Leeds.
In a speech in Leeds, Labour leader Ed Miliband will say councils can work together to be "economic powerhouses" leading investment in infrastructure, skills and economic regeneration. They would be allowed to keep any extra business rates income generated by growth to invest locally.
Labour could devolve £30bn in funding for regional enterprise, he will add. But they would get their grant from government cut by the same amount.
'Shared prosperity' This means the plan is "revenue neutral" - it would not cost taxpayers anything - but would hand more control over how money raised locally is spent in that area.
The Labour leader will say he is accepting the majority of the recommendations of a report by the former Cabinet minister Lord Adonis on how to stimulate business innovation and tackle "chronic regional imbalances" in growth. At the moment, business rates are collected locally but the money is handed to central government to be redistributed to councils in line with a Whitehall-set formula.
Former Transport Secretary Lord Adonis believes more than £30bn could be freed-up for local authorities to spend how they like on boosting growth in their areas.
Mr Miliband has accepted most of the recommendations of a report by Lord Adonis on how to stimulate business innovation and tackle "chronic regional imbalances" in growth.
Its main proposals include:Its main proposals include:
Mr Miliband will say that job creation in the private sector has been too concentrated in London since 2010 and that he wants to see every part of Britain contribute to a new "era of shared prosperity". Mr Miliband said job creation in the private sector has been too concentrated in London since 2010 and that he wants to see every part of Britain contribute to a new "era of shared prosperity".
A future Labour government would seek to achieve this by reforming the relationship between local and central government not by big Whitehall spending, he will say. A future Labour government would seek to achieve this by reforming the relationship between local and central government not by big Whitehall spending, he said.
Using tax as a "lever" for raising levels of regional growth, Mr Miliband will cite the Greater Manchester Combined Authority as a model for how cities and counties can pool their resources and know-how to make a difference. Using tax as a "lever" for raising levels of regional growth, Mr Miliband cited the Greater Manchester Combined Authority as a model for how cities and counties can pool their resources and know-how to make a difference.
For the past three years, the 10 councils in Greater Manchester have been co-ordinating their economic development, regeneration and transport functions to try and map out a long-term plan for sustainable, balanced economic growth.For the past three years, the 10 councils in Greater Manchester have been co-ordinating their economic development, regeneration and transport functions to try and map out a long-term plan for sustainable, balanced economic growth.
'Harnessing ideas' As an incentive to try to encourage similar collaborations, Mr Miliband said new combined authorities established under a Labour government would be free to spend however they choose any extra revenue they generate from business rates as a result of their own efforts.
As an incentive to try to encourage similar collaborations, Mr Miliband will say new combined authorities established under a Labour government will be free to spend however they choose any extra revenue they generate from business rates as a result of their own efforts.
Business rates are charged on most non-domestic premises, including warehouses, shops, offices, pubs and factories.Business rates are charged on most non-domestic premises, including warehouses, shops, offices, pubs and factories.
The settlement will be "revenue neutral" and any extra revenue raised will be offset by a cut in councils' block grants but Mr Miliband will stress the importance of money raised locally being spent locally. The settlement will be "revenue neutral" and any extra revenue raised will be offset by a cut in councils' block grants but Mr Miliband stressed the importance of money raised locally being spent locally.
"The next Labour government will ensure city and country regions, like this powerhouse economy in Leeds, get control of business rates revenues. So that any extra money raised here thanks to the efforts of you and everyone in this great city can be invested here."The next Labour government will ensure city and country regions, like this powerhouse economy in Leeds, get control of business rates revenues. So that any extra money raised here thanks to the efforts of you and everyone in this great city 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 ideas, energy and the dynamism of great businesses, cities and county regions so you can help build and share in a more successful and prosperous Britain.""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 ideas, energy and the dynamism of great businesses, cities and county regions so you can help build and share in a more successful and prosperous Britain."
Lord Adonis conceded that his proposals were similar to those set out in a recent speech by Chancellor George Osborne and a report last year on boosting growth by former Conservative Deputy Prime Minister Lord Hesesltine, entitled No Stone Unturned.
The Labour peer said he had spoken to Lord Heseltine when putting together his report and broadly agreed with his call for "more powerful cities" but although there was now a political consensus on the need for greater regional devolution only Labour would deliver it.
"Increasingly, I think, the question is who is going to act, rather than just make speeches," he told BBC Radio 4's Today programme.
"And act means really serious devolution of resources and also preparedness to devolve tax resources.... to give really big incentives to the big cities and counties to attract business."
Skills shortages
The BBC's political editor Nick Robinson said the economic test of the package was whether it would rebalance the British economy. But he said Labour also knew it needed to answer the charge that it knows how to spend the proceeds of growth but not how to generate it.The BBC's political editor Nick Robinson said the economic test of the package was whether it would rebalance the British economy. But he said Labour also knew it needed to answer the charge that it knows how to spend the proceeds of growth but not how to generate it.
The CBI said the report "identifies the right priorities for growth and job creation, and recognises that the benefits of the recovery must be shared across all regions of the UK".The CBI said the report "identifies the right priorities for growth and job creation, and recognises that the benefits of the recovery must be shared across all regions of the UK".
"His report addresses many of the major challenges facing our economy, from skills shortages to strains on infrastructure," said its deputy director general Katja Hall."His report addresses many of the major challenges facing our economy, from skills shortages to strains on infrastructure," said its deputy director general Katja Hall.
"Size matters for local government, and more combined authorities would help create regional economic powerhouses to invest in research and development, support exporters and expand apprenticeships.""Size matters for local government, and more combined authorities would help create regional economic powerhouses to invest in research and development, support exporters and expand apprenticeships."
Last year, ministers set out plans for councils in England to keep half of any increase in business rates they generate rather than paying them into Treasury coffers.Last year, ministers set out plans for councils in England to keep half of any increase in business rates they generate rather than paying them into Treasury coffers.
Business rates are paid into a central pool before being redistributed to all councils in the form of a grant. Councils currently generate less than half of their income but ministers believe this figure could ultimately rise to 80% or more.Business rates are paid into a central pool before being redistributed to all councils in the form of a grant. Councils currently generate less than half of their income but ministers believe this figure could ultimately rise to 80% or more.