Miliband backs call to tackle divide

The campaign has raised concerns about the growing North-South divide and how this is threatening hopes for a sustained recovery in the wider economy.

It has highlighted figures that show lower levels of job creation and higher rates of redundancies in Yorkshire compared with other parts of the country.

Mr Miliband said: “It’s a great campaign because the future of our economy can’t be built simply in the South-East and London, and if you look at Britain as compared to other successful European countries we are still far too centred on London in terms of where economic growth is.”

He said campaign demands for more powers for local authorities, a regional element in national economic policy and support for advanced manufacturing are “absolutely essential” to rebuilding the economy on a different basis from the past.

“There needs to be the will and the understanding that the old ways aren’t going to work any more and we have got to build in a new way and I think your campaign is an absolutely central part of that.”

The Doncaster North MP was speaking in Leeds ahead of his appearance at the annual dinner for regional members of the Confederation of British Industry.

Mr Miliband told the Yorkshire Post that Ministers could transform the economy of the North by handling procurement in a more strategic way like international rivals.

“The Government spends a lot of money on procurement every year – over a hundred billion pounds. The way we do it is not smart enough.”

He said Ministers should do more to support UK manufacturing in the way that they hand out contracts. He claimed that better procurement could create or save jobs at companies like Bombardier and BAe Systems, two manufacturers that are making thousands of redundancies.

“Because money is going to be so tight in the future, we can’t just succumb to an old view that says procurement is about a very narrow value for money calculation.

“Value for money yes, but value for money understanding the economic impact and the impact on the country of decisions you make.

“Other European countries do it much better than us and we have got to learn those lessons,” he said.

Mr Miliband also said that the banking system has to work more closely with the needs of industry and revealed details of a case in his South Yorkshire constituency in which a local company was shunned by UK lenders after it sought funding for investment in an anaerobic digestion project.

He said the firm “ended up partnering with a German company and got a loan from a German bank”.

He added: “It’s not bashing bankers, it’s about saying the way financial services works has got to change because that’s private sector money that can be used to support investment.”

Mr Miliband was a Cabinet Minister in Gordon Brown’s government and was previously a close advisor to Mr Brown when Chancellor.

Asked how he would explain to a sceptical business audience that the Labour Party has economic credibility, he said that “the argument in politics is not about whether you get the deficit down, it’s how you get the deficit down”.

He said the coalition is ignoring the importance of growth in its austerity drive, adding that “economic credibility comes from making the right judgments about growth and therefore about the deficit”.

He added: “My worry about the Government is they have not got a plan for growth and therefore they haven’t got the right plan for the deficit. I care deeply about getting the deficit down, but I think we have a better idea of how to do it than they do.”