Northern activists welcome Miliband regional bank plan

The Hannah Mitchell Foundation argued that a "strong network of regional and local banks, co-operatives and mutuals is essential for the revival of the north's economy."

Chairman Barry Winter said: "Northern businesses, and people with new ideas, need the support of a banking system which understands the needs of the region. We simply don't have that at the moment.

"Working with a northern regional government and empowered local authorities, we could reverse the decline of the region's industrial base," he added.

Mr Winter described Mr Miliband's proposal as "the sort of radical and creative thinking which Labour needs to do more of."

The Foundation said the inspiration for the regional banks plan owes much to the German model of regional and local banks, the "sparkassen," which can only lend within their regions and have a duty to "promote civic growth."

In 2011 the German local banks had a total loan stock of £280 billion while the figure for German commercial banks was only £153bn.

The Hannah Mitchell Foundation, founded last year, is a broad campaign for northern devolution, supported by many MPs and peers, including Lord Prescott.

Halifax Labour MP Linda Riordan is president of the foundation, named after a Manchester activist jailed for campaigning for women's votes early last century.