Devolution remains ‘at the heart' of the Government's approach to supporting local growth, chancellor Philip Hammond insisted in his Autumn Statement today.

Mr Hammond said economic growth had been too centralised in London and the south-east for ‘too long' as he outlined a range of measures to address the gap.

He said: ‘No other major developed economy has such a gap between the productivity of its capital city and its second and third cities so we must drive up the performance of our regional cities.'

The Autumn Statement policy paper added: ‘The Government remains committed to devolving powers to support local areas to address productivity barriers. 

‘The Government has published a strategy setting out an overall approach to building the Northern Powerhouse, through addressing the key barriers to productivity that the region faces.'

The measures include new borrowing powers for mayoral combined authorities in England to ‘reflect their new responsibilities'.

Mr Hammond also announced the regional redistribution of the next round of the Local Growth Fund – worth £1.8bn – though local enterprise partnerships will have to wait for the detailed breakdown of allocations.

Negotiations will begin on a city deal for Stirling while a strategy for the Midlands Engine will ‘follow shortly,' Mr Hammond added.

Greater control for the adult education budget and the delivery of employment support services for the ‘hardest to help' will be given to London – though the Government said it would continue to work with the capital to ‘explore further devolution of powers over the coming months'.

The extra powers announced for London fall short of hopes for a full deal, including fiscal devolution.

London Councils' chair, Claire Kober, said: 'We have clearly not reached our destination.

'This is very much one step on the journey and we will continue to press for devolution to move faster and go further.'

A pre-statement briefing by London Councils read: ‘London government desperately needs new powers to invest a larger share of the income we generate in our economy to unlock further growth, rapidly up skill our labour force to meet current and future skills challenges, help long-term unemployed Londoners get back into work, improve transport links for the growing numbers of commuters our businesses rely on, and deliver a housing policy that can boost the supply of much-needed homes and that reflects the unique circumstances of London and its housing market.  

‘London government, given more freedoms, is best placed in key areas of policy to drive economic growth and development.  

‘Devolution will enable London government to reform and better integrate a range of public services.

‘This will put the focus on cost-effective prevention rather than costly failure, help London in trying to manage the challenge of austerity and help us make London more productive.'

Chief executive of the LGiU think-tank, Jonathan Carr-West, said it was 'worrying' that there was nothing in Mr Hammond's speech about devolution 'beyond the major cities'. 

Partner at law firm Bevan Brittan, Judith Barnes, said: 'The devolution agenda had a relatively low profile in today's statement.  

'Mr Hammond said that devolution is at the heart of supporting local growth – but we need to see more tangible progress around the country if the vision is to become a reality.'

Devolved and local government leader at PwC, Chris Buttress, added: 'To help regions in the UK fulfill their economic potential, devolution needs to move towards a whole-system approach and make public services reform and investing for growth part of the same equation.'

The announced increase in infrastructure spending will mean an extra £800m to the Scottish government, an additional £400m to the Welsh government and £250m to the Northern Ireland Executive through the Barnett formula.