Labour - working with or against business?

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Labour is promising to give more power and more money to cities outside London and the regions that surround them.

It is one part of a series of policies designed to mend what the party is calling the "fractured economy" symbolised by one stark fact - eight out of 10 new private sector jobs created in the past four years have been created in London. (see update below about the dispute over these figures)

The return of economic growth will not solve that or many of the underlying weaknesses of the British economy a detailed report by the former Transport Secretary Lord Adonis will argue.

At its heart is the idea of giving so-called city regions - combined groups of urban councils - an incentive to invest in improved skills and infrastructure. Under his plans they would receive any extra revenue raised in business rates as a result of the investments they make.

That would be in addition to the devolution of up to £30bn worth of existing Whitehall funds and thus, Adonis argues, a more ambitious package than that recommended to the coalition by Lord Heseltine.

Adonis has also produced recommendations for improved technical education, apprenticeships and support for business innovation.

The economic test of this package is whether it would rebalance the British economy.

The political test is more easily stated. Alongside a speech by Ed Balls on Monday and one by Ed Miliband on Thursday this announcement needs to answer the charge that Labour knows how to spend the proceeds of growth but not how to generate it.

It must start to convince big business that the opposition wants to work with them and not just subject them to new rules, regulations and taxes.


When Ed Miliband spoke he dropped the quote in the press release of his speech about four out of five jobs being created in London since 2010.

This was after the Tories pointed out that his figures were 2 years out of date and highlighted the latest official ONS statistics that in the last year four out of five jobs were actually created outside London. This is the link to the latest data.

When I asked the Labour leader about this he replied that he was using the "best data I've seen".

His source was a report by the Centre for Cities who have now written justifying their use of old numbers and arguing that the ONS data does not reflect reality because, for example, they measure jobs by where people live rather than where they actually work (so a man with a job in London who lives in St Albans is counted as a job in London). Here's the link to their explanation.

The politics of this is revealing. The Tories are, in effect, saying that Labour is in denial about the economic recovery which is helping the regions and not just London whilst Labour is claiming that ministers are in denial about long-seated problems in the British economy.

In reality the proposals re giving more power and money to city regions in the Adonis report are very similar to those in Lord Heseltine's report. The parties differ in bank reforms and in the detail of their pledges on how to boost vocational education

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