Former Labour cabinet minister Lord Adonis and party leader Ed Miliband have teamed together to propose a radical change in the way we structure our economy. The key proposal is to rebalance economic growth outside of London and create ‘regional powerhouses’. The rhetoric is incredibly similar to that used by George Osborne who earlier this week said we need a ‘northern powerhouse’ when proposing his plan for HS3. As Labour and the Tories go toe to toe, it seems the battle for the regions has officially begun and could play a huge role in determining who wins the general election in 2015.
During his speech on Thursday Miliband will reveal that councils under a Labour government will be able to control how they spend any additional income they receive from business rates. This effectively rewards local authorities if they succeed in encouraging economic growth and attract employers to their region.
Labour could also devolve up to £30bn in funding for regional enterprise over five years, in an attempt to boost economic growth, employment and tax revenue.
There is a cross-party consensus that regional growth is massively important. Michael Heseltine’s plans to target the regions were accepted by Chancellor George Osborne earlier this year and both parties have been talking of helping the north for a long while.
Miliband does however need to prepare himself for the onslaught that is about to come. Labour has a reputation of being reckless with government spending and being incompetent with the economy. Proposing £6bn of spending on the regions every year will result in the usual cries of ‘same old Labour’ from the Tories.
Grant Shapps, the Conservative party chairman has has been quick in his predictable response of “It’s the same old Labour - dominated by unions who want more spending, more borrowing and more taxes.”
Irrespective of the usual criticisms, the policy is the right one. It is not only needed but will undoubtedly help the entire country long term.
Private sector growth and job creation has been focused primarily in London, with not many outside the capital feeling the benefits of a recovering economy. Rebalancing is massively important and government spending might be the only way to do that.
Miliband’s plans have already received a lot of support, both the CBI and trade body EEF welcomed the idea, but whether the finances are in place to implement the proposals are another issue. Lord Adonis has said his aim was to promote "a smarter, not a more expensive, state".
The full details of where the finances will come from will determine how successful this new policy is, but on the face of it, Ed Miliband and his Labour party have taken the lead in the race to win the regions.