Labour announces devolved cities spending plan

The Labour party has pledged that if it wins the next general election, it will provide a funding boost to councils and give cities more autonomy, in a bid to close the gap between London and the rest of the country.

In a speech in Birmingham on Tuesday, party leader Ed Miliband is expected to announce plans to give £20 billion to councils to spend on skills, back-to-work schemes, housing and infrastructure – without needing approval from central government – in an appeal to voters outside of the capital.

Many observers have recently expressed concern over the comparative prosperity London enjoys over the rest of the country, with many arguing that the capital’s success comes at the expense of other cities.

London pulls talent and investment from elsewhere in the UK, and is currently growing by 1,000 people (a tube train’s worth) per week. 

Business secretary and Liberal Democrat MP Vince Cable recently said London’s economy was “a giant suction machine draining the life out of the rest of the country”.

Today, Miliband is expected to say, “We need a prosperous London, but we also need to build prosperity outside it.”

He will argue that the coalition government has failed to give towns and cities the economic powers they need to create new jobs, according to extracts of his speech released in advance: “Today, every region outside London is below the national average when it comes to productivity, while London is 40% above it.”

He will also claim that the move would be the “biggest devolution of powers to towns and cities in a hundred years“.

Under the scheme, local authorities would have bid for their share of the funding and prove that their economic strategies will create high-skilled, well-paid private sector jobs.

The proposals are similar to the current government’s ‘City Deals’ scheme, which has given England’s eight biggest cities greater freedom to make economic decisions.

The government says that this is evidence that they have listened to the recommendations of a 2012 report by former deputy prime minister Lord Heseltine which called for £49 billion in resources to be devolved from London to the rest of the country.

However, Labour has accused the government of ignoring Heseltine’s findings. 

One study published in January by the thinktank Centre for Cities demonstrated the disparity between London and the rest of the UK.

The report found that the capital accounted for 80% of national private sector jobs growth between 2010 and 2012. Even in the public sector, the report said that for every job created in London, two are lost elsewhere.

Photo: Alex Goodey via Flickr

Further reading:

Labour urged to take ‘equal and sustainable society’ vision to next election

Wealth inequality costs ‘deeply divided’ UK £39bn a year

Evan Davis’s Mind the Gap series highlights division between London and the rest

Widening gap between London and the rest of the UK