In October 2010, the coalition's White Paper on local growth promised that its first priority would be ‘shifting power to local communities and businesses' through the creation of new Local Enterprise Partnerships (LEPs).

The deputy prime minister told us this would ‘foster prosperity in all parts of the country'.

Three years on, these claims ring hollow.  LEPs lack both resources and capabilities, with negligible budgets and no real powers to lead economic development in their areas.

They risk being written off as ‘talking shops' as a result and a recent CBI survey found that half of businesses expected LEPs to have little or no impact on growth.

The latest high rhetoric on economic localism was set out by Lord Heseltine in his report No Stone Unturned.

It had bold plans to boost the resources and responsibility that both local authorities and LEPS have over economic policy.  It received wide support.

But, in this summer's Spending Review the Chancellor only earmarked an extra £2bn for LEPs – this is barely 4% of what Lord Heseltine recommended.  It will only be available from 2015/16 and the money has been top-sliced from local government funding.

What is more, Whitehall has done what Whitehall always does and clawed back the powers over skills, housing and business support that Labour previously forced it to devolve to Regional Development Agencies (RDAs), despite initial promises that these would pass to LEPs.

As Labour set up the RDAs after the 1997 election, I and others worked hard to establish the principled and economic case for sub-national economic policy.

We had to alter what Ed Balls and I described in an early joint pamphlet as ‘the prevailing orthodoxy at the Treasury that…city and regeneration policies were essentially seen as distributional palliatives for treating the symptoms in the poorest places'.

This task is not just of academic interest.  Reform which is not advanced in theory will not be sustained in practice, as the recent experience of LEPs has shown.

The core insight of the case for locally-based economic policy and delivery is that local institutions, at their best, can bring together economic agents who have both an incentive to deliver growth and jobs in their areas, and the local insight and information to do it well.

As globalisation increases the risk that some regions are left behind this case becomes more pressing.

Areas which can compete in international markets can thrive, while others risk stagnation or decline and benefit little from the greater global movement of capital.

Intra-nationally and internationally, the lesson of recent decades is that globalisation can both create and reinforce unbalanced economic development.

There are three central reasons why sub-national arrangements and institutions are better placed to deal with these potentially disruptive and inegalitarian global economic forces.

First, they can better identify local competitive advantage and foster collaboration to realise that advantage.  We know that economies succeed when they focus on their specific strengths.  But, it makes little sense to talk of national competitive advantage when the opportunities for growth vary so much from one area to another within the UK.

For growth and jobs to flourish, strategic decisions that require the co-ordination of public and private sectors need to be made on regeneration, planning, investment, business support and skills.  This is very difficult to do without strong leadership at that local level.

The world-leading Advanced Manufacturing Park in Rotherham connects Sheffield University expertise to global businesses like Boeing and Rolls Royce, building on the local pedigree of advanced materials manufacturing and engineering.  But, it was only the leadership from the RDA Yorkshire Forward that made this happen.

Second, despite the digital age, much knowledge transfer and innovation still goes on at the local level.

Good connections between firms at this level can generate a wide range of spill-over gains with mutual learning on different ways of working, insight into new products and markets, and additional partnerships.

Again, it was Yorkshire Forward's strategic focus on low carbon and the energy strengths of the region that has led David Brown in Huddersfield to branch out into wind renewables or Drax to develop carbon capture and storage.

Third, local or regional economies need organisations as their advocates on the national and international stage because the interests of national business organisations or government will often be different.

Next year's Tour de France will start in Leeds because Yorkshire's own tourism agency and local councils combined to win ‘le grand depart', while ministers were backing Scotland's bid.

Labour has nailed its colours to the LEPs' mast.  Shadow business secretary Chuka Umunna pledged last year ‘we will work to improve LEPs, not abolish them, if elected'.

I can appreciate the argument for avoiding two years of fresh legislation and re-organisation but if Labour want to succeed where the coalition has failed – and most importantly, if we want LEPs to succeed – then creating a powerful intellectual economic case for decentralisation is just as important as specific policy plans.

John Healey is a former local government minister