Michael Heseltine may be true blue, but it is the red corner which has whole-heartedly embraced his plans for devolution, according to the man forming the Labour's policy for the regions.

Former deputy prime minister Lord Heseltine spent months in Birmingham developing plans to transfer £49 billion from central government to the English regions to help local leaders and businesses.

But the Government's response disappointed most in the regions - with only about £2 billion a year being allocated for the Single Local Growth Fund.

Former transport minister Lord Adonis says in-fighting over Whitehall powers had held the Government back but Labour was now united in plans to bring about decentralisation.

Labour leader Ed Miliband recently unveiled plans to strip Whitehall of £20 billion to devolve power and get "combined authorities" in regions spending on transport, housing, training and programmes to get unemployed people into work.

Lord Adonis told the Post: "I think the Labour party is committed to devolution, as Ed Miliband said in his speech in Birmingham.

"The coalition is clearly internally divided and the Department for Business, Innovation and Skills control some of the biggest central budgets which Lord Heseltine proposed to devolve, particularly in respect of skills, and they have decided to keep those central.

"I think the real problem here is the inability of the Coalition to deliver on Lord Heseltine's recommendations."

When asked if Labour would go on to deliver the "full Heseltine", he added: "I wouldn't want to put a precise figure on it, but I think a substantial amount more devolution could be implemented than has so far.

"Of course the Coalition rejected most of the devolution that Lord Heseltine proposed. Only a small fraction has in fact been included in the single pot."

Mr Miliband has urged the region's councils and local enterprise partnerships to come together under a combined authority to profit from a major boost in regional funding – with the term "Greater Birmingham" sprayed around as a catch-all for Birmingham and the Black Country.

He said a Labour government would bring back the position of Minister for the West Midlands as part of a radical package of measures to devolve power to the regions.

He used a visit to Birmingham to announce that Labour's general election manifesto would focus on plans for "devolving power from Whitehall to our towns and cities", to create jobs and "rebuild the middle class".

The announcement came on the back of work from Lord Adonis about the potential tax-raising powers of new city regional authorities.

"We are looking to more substantial devolution than has happened since the Heseltine report," Lord Adonis said.

"Lord Heseltine recommended very large budgetary devolution including a large part of skills and regional transport budgets to the cities and to LEPs and in fact only a few billion has been devolved since. We are looking to increase that figure substantially.

"I hope that we deliver more of Lord Heseltine's original vision, which was very substantial devolution, particularly around skills and transport, which is very important to regional growth."

Lord Adonis is due to publish his full growth review by the late summer.

However, the party has already revealed a vision of combined local council authorities working alongside the Government's existing business-led local enterprise partnerships (LEPs) to form engines of growth in Britain's big cities.

Like many in his party, Lord Adonis has not been impressed by the impact of LEPs, which were brought in after regional development agencies were abolished, but he is keen to ensure the current system is not torn up leading to years of limbo.

He was also critical of the Regional Growth Fund, saying the Government had struggled to reach businesses.

"We certainly don't want to destabilise the existing LEP system," he said. "It is important to build on it, not to undermine it.

"I think it was a big mistake of the present Coalition government in 2010 to abolish the regional development agencies and then adopt a scorched earth policy in respect of regional policy, and we wouldn't repeat that. Labour supported the setting up of combined authorities which bring local authorities together in an LEP area to create a single authority to take charge of regional transport and economic development, as in Greater Manchester.

"Another four combined authorities were established this month, Merseyside, Leeds, Sheffield and the North East and I think that strengthens the case for devolution, when you have got combined authorities that combine the democratic legitimacy and functions of local authorities with the business voice and mobilisation that the LEPs can provide."

On the Regional Growth Fund, Lord Adonis said: "The problem with the Regional Growth Fund where there is that competition, is they haven't been able to get that money out of the door.

"I am strongly in favour of support for regional growth initiatives, but the Regional Growth Fund hasn't been a success in doing that."

The issue of city regions may have little traction on the doorstep, but for businesses and local government the concept is seen as critical to regeneration.

The switch to LEPs, which are driven by the private sector, meant a long gestation period, but the bodies have now started to find their feet – with a general election looming.

However, issues remain around funding from Europe and Lord Adonis said the creation of city and county regions would create "strong regional institutions" recognised across the continent.

"I would hope that people would start to notice the difference quite soon with the larger budgets," he added.

"For example, we need a step change in the number and quality of apprenticeships which I think is a big priority.

"If more funding was devolved and this was made a priority, I would hope you would see big improvements in areas like that quite fast."

Elsewhere, while Lord Adonis has been a strident supporter of elected mayors, he said another vote in Birmingham would be unlikely in the short-term.

In a 2012 referendum, 57.8 per cent of voters in Birmingham opposed an elected mayor.

"I was strongly in favour of a mayor for Birmingham when the referendum took place in 2012 but Birmingham voted against so I think that debate is closed," Lord Adonis said.

"I don't think you could reopen this issue at an early stage, given the referendum was only three years ago, but in due course I think the success of the Mayor of London will continue to make itself felt in other big cities.

"My own view is that great cities like Birmingham, Manchester, Leeds and Sheffield would be better off with elected mayors because they would have much stronger clout and political strength in their own cities and nationally."