Devolution ‘to remain a priority for Lib Dems going into next election’

Mr Clegg trumpeted “city deals” and new powers for councils to borrow and retain some of their business rates as examples of the way the Coalition had relaxed Whitehall’s grip on public spending since coming to power.

But he also highlighted the freedoms given to regional authorities in other European countries to raise and spend revenues without interference from the Government.

Asked about the possibility the Liberal Democrats could go further in their next General Election manifesto, Mr Clegg said: “We will always be at the forefront of pushing for fiscal decentralisation.

“I think over the last two-and-a-half years we’ve probably done more to loosen the clammy grip of the Treasury on how money is raised and spent than any Government over the last 20 years.

“Yes we need to do more of it but I don’t want you just to pocket what we’ve done as some Sunday school picnic of a change.

“It’s actual quite a big change which can subsequently be built on by future parliaments and governments.”

The Government agreed city deals with the Leeds and Sheffield City Regions last year which saw significant powers and funding in areas such as transport and skills handed over from Whitehall to Yorkshire.

A report by Lord Heseltine, commissioned by the coalition and published last year, called for local enterprise partnerships to be given the chance to take control over billions of pounds of Government spending.

Mr Clegg said moving to greater local decision-making was a central plank to restoring growth to the British economy at a time when the Government had to cut spending.

“If the central state is cash strapped which it is and will be for a very long time the only way you can square the circle to allow for greater economic innovation and growth is to give local areas more freedom, and more means to do something with that freedom, to invest in economic success in our local areas.”

Speaking earlier at the Yorkshire Vision event, Ed Cox, director of the IPPR North thinktank, questioned the Government’s call for regions to come forward with “shovel ready” projects.

“The fundamental problem I think is the inability of English regions like Yorkshire to determine their own path to growth in what is an increasingly competitive local economy,” he said.

“Regions quite simply don’t have the shovels they need to get digging.”