Sir Keir Starmer has promised to “level up” regions more effectively than the Conservatives by giving extra powers to local leaders.
Launching the party’s local election campaign, the Labour leader said the Tories had failed to deliver on their pledge to reduce regional inequality.
Further devolution was “essential” to make the ambition a reality, he added.
It comes as the party confirms details of its plans to offer new powers to councils in England.
Labour says if it wins the next general election, it would extend the responsibilities given in recent years to mayors in city regions, such as Tees Valley and West Yorkshire.
It would also offer extra powers to areas that are yet to secure them.
Elections are taking place on 2 May for more than 100 local authorities and mayors in England, and police and crime commissioners in England and Wales.
The Conservative promise to “level up” different parts of the UK was one of the flagship political slogans of former prime minister Boris Johnson.
The promise has been widely credited as a factor in helping the party take swathes of previously safe Labour seats at the 2019 election in former industrial areas in the Midlands and north of England.
In a speech in Dudley, Sir Keir acknowledged that the pledge had “struck a chord” with voters and was a “good ambition”.
But he said the Conservatives had failed to put in the “hard yards” to make the plan work, adding their promises to the public to level up their areas had been “preying on their hopes”.
Giving more power away from Westminster, he added, was “absolutely essential for taking on regional inequality”.
He was also critical of the government’s record on levelling up spending, noting a recent report from MPs that only 10% of funding earmarked for projects has actually been spent.
Speaking before him, deputy leader Angela Rayner said councils had been forced to go “cap in hand” to government to fund schemes, likening Levelling Up Secretary Michael Gove to an investor on TV show Dragons’ Den.
Labour has promised that, if elected, it would give extra powers in areas like housing, transport and planning to those areas that have acquired responsibilities in recent years under “devolution deals”.
It also says it would invite all areas of England without a deal to bid for new powers, with councils located in “sensible economic geographies” joining together to apply.
The party has also confirmed that it would place a legal obligation on all areas with a deal to produce plans setting out how they would use the new powers to boost economic growth.
But Sir Keir acknowledged that, given the economic backdrop, his party would not be able to “turn the taps on” to boost strained council budgets. “The way out of that is to grow our economy,” he added.
Asked whether his plans would be accompanied by new spending, he said improving the spending rates on existing projects would “release a huge amount of money”.
He added that Labour was also aiming to boost investment from the private sector by providing investors with a “viable plan” for boosting growth.
Speaking afterwards to the BBC, Sir Keir promised that councils would be “better off” after five years if his party wins power – but declined to say whether they would get more cash in the first year of a Labour government.
He pledged, however, Labour would “reduce the strains” on local finances through multi-year budgets, ending no-fault evictions and bringing down inflation by “stabilising” the economy.
There have been a series of devolution deals in recent years – with agreements with varying powers for local leaders agreed for 22 areas in England.
The government’s Levelling Up and Regeneration Act, which passed in October, set a target that every part of England that wanted a deal should get one by 2030.
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