Miliband and Adonis vow to shift £30bn of central funding to LEPs

Regional funding boost is key to driving growth outside London, according to a new report by Lord Adonis.

Antony Oliver
02 July 2014

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Planning

Labour leader Ed Miliband this week added to the growing political support for devolving more infrastructure spending power to the regions, as set out in Lord Heseltine’s 2012 “No Stone Unturned” report and just a week before £2bn of Growth Fund is divided up amongst Local Enterprise Partnerships. 

[see feature The next big leap for LEPs]

In a speech in Leeds on Tuesday which echoed many of Chancellor George Osborne’s comments the week before, Miliband this week vowed to shift some £30bn of central transport and infrastructure spending to boost the funds available to Local Enterprise Partnerships and help stimulate growth across the regions.

“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.”

Miliband backed the findings of a report by former transport minister Lord Adonis aimed at tackling “chronic regional imbalances in growth by creating strong city and county regions” using tax as a lever for raising levels of regional growth.

“The Adonis Review sets out plans to devolve £30bn 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,” he said. 

“Any extra money raised here thanks to the efforts of you and everyone in this great city can be invested here,” he added. “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.”

[see q and a with LEP bosses - LEPs: changing the game at local level]

“I know the next Labour Government cannot solve every problem by pulling levers in Whitehall,” he added. “We can only do it by working with, harnessing the energy, the ideas and the dynamism of great businesses, cities, county regions – and you.

Miliband said that his policies to reverse centuries of centralisation would lead to:

• The creation of more combined authorities to tackle the chronic problems of poor skills, infrastructure and economic development.
• These regional economic powerhouses would receive additional business rates revenue generated by growth to invest in building further success. This would be revenue neutral – offset by reductions in grants.
• Local Enterprise Partnerships would be strengthened to give businesses a direct say over growth strategies and priorities, backed by a substantial single pot of funding to invest in economic development.
• More than £30bn of funding identified by the Adonis Review could be devolved to combined authorities, existing local authorities and LEPs over the course of a parliament – three times more than is planned now. This would include funding for housing, transport, business support, employment and adult skills.
• Setting a long term national funding framework for innovation giving small innovative firms greater access to government research budgets for all departments.
• Consider proposals to expand of the number and capacity of Catapult Centres which help to commercialise research in key growth areas such as manufacturing and cell therapy.

The Adonis Review

The review by Lord Adonis goes further than Lord Heseltine’s report by recommending greater use of government powers to help and nurture the growth of small businesses, support exporters and build on existing policy announced by Labour for their general election manifesto.

“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,” explained Adonis launching his review. 

“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,” he added.

The Adonis Review recommendations include:

• Setting a target for 25% of all government procurement contracts to go to SMEs both directly and through supply chains.
• 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.
• Creating a regional network of Small Business Investment Companies in line with Labour’s policy on introducing regional banks
• Offering better support through LEPs for business hubs to spread apprenticeships and help start-up businesses
• Reforming UK Trade & Investment and UK Export Finance so they give better support to business.
• 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 create a new “Teach Next” organisation for successful career switchers to teach maths and science.
• Giving teenagers clearer navigation towards work or an apprenticeship by appointing directors of enterprise and employment in schools.