Chancellor George Osborne dealt a blow to plans to revolutionise regional spending after revealing the Single Local Growth Fund would be lower than hoped.

In his spending review, the Chancellor revealed the value of the “single pot”, which local enterprise partnerships (LEPs) will bid for to fund local projects, would be £2 billion a year, or £10 billion over five years.

The move follows a report called No Stone Unturned, aimed at boosting regional growth, by former deputy prime minister Lord Heseltine, which had called for about £70 billion of spending power to be taken from Whitehall and given to the regions.

There was, however, a boost to infrastructure, with plans for £50 billion to be invested in 2015 announced by the Chancellor.

Richard Halstead, Midlands region director of manufacturers’ body the EEF, said he was pleased progress had been made on the single pot.

He said: “Starting off with a small single pot is the right move. A phased approach gives LEPs the opportunity to demonstrate their value in important areas like transport before more taxpayers money is devolved.”