A Labour government would set up a regional bank to ensure firms across the West Midlands and could borrow money to invest, party leader Ed Miliband is to announce.

Local authorities could have seats on the board of the bank, which would have a remit to lend locally and to invest in the “real economy”, backing businesses which create jobs rather than merely speculating on the markets.

The bank could also have a savings arm with high street branches, allowing savers to put their cash into a “bank of Birmingham” or similar body.

The aim is to tackle concerns raised repeatedly by businesses organisations including Birmingham Chamber Group, which says employers are still finding it very difficult to obtain credit.

Labour also says its plan is designed to shake up the banking system by providing more competition for the existing banking giants.

Start-up capital would be provided by the Government through a national state-owned British Investment Bank.

The regional banks would not be state-owned but they would be bound by the terms of licenses governing their behaviour and requiring them to lend locally.

They could be created by local entrepreneurs, councils, chambers of commerce, Local Enterprise Partnerships or other bodies.

A party official said: “We are not setting out a blueprint detailing exactly how they will work because we want to allow for different arrangements in different parts of the country. However, this is something that will happen under a Labour Government.

“They will be committed to their regions and in touch with local business, making it easier for firms to secure the capital investment they need so they can create the growth and jobs Britain needs. Labour will consult on the best options for delivering them.”

It is likely around 20 banks would be created across the UK.

In a speech to the British Chambers of Commerce in London, Mr Miliband was underlining his determination for “One Nation Labour” to become the party of small business and enterprise.

He was expected to say: “We don’t just need a single Investment Bank serving the country.

“We need a regional banking system, serving each and every region of the country.

“Regional banks, with a mission to serve that region and that region alone. Not banks that like to say ‘no,’ but banks that know your region and your business. Not banks that you mistrust, but banks you can come to trust.

“I am committed to turning that idea into reality during the next government. Because I am determined that One Nation Labour becomes the party of the small business and the entrepreneur as together we create a recovery made by the many and built to last.”