Birmingham is to call for greater tax-raising powers under a motion backed by senior councillors.
Council leader Sir Albert Bore’s call for an endorsement of the UK-wide Centred Cities campaign to break free from strict government control has been backed by Labour and Liberal Democrat councillors.
An amendment from the Conservatives on Birmingham City Council warning against granting local powers of taxation was voted down.
The Centred Cities campaign will see all the UK’s major cities, as well as London boroughs debate similar motions to present a united front to Whitehall in the battle to wrestle greater autonomy.
The campaign has also been backed by the Mayor of London Boris Johnson.
According to the Centre for Cities lobby group, UK cities raise just 17 per cent of their money locally and are therefore dependent on 83 per cent of funding from Government grants – much of these with strings attached.
Sir Albert said that London and the major cities represent over half of the national economy and half of the population but are being held back by government.
Often cities wait years for major infrastructure projects like the New Street Gateway development to get the funding needed.
The last attempt to boost cities, Lord Heseltine’s No Stone Unturned report, called for some £50 billion to be released from the Government to the regions, but Chancellor George Osborne put just £2 billion into the Local Growth Fund.
Sir Albert said: “The idea that we should be forced to freeze our council tax rate or be required to conduct a referendum if we wish to raise it above an arbitrary cap would have been laughable to Joseph Chamberlain.
“That centralisation is the source of our dependence on government and the constraint on ability to drive growth in this city.
“The local government finance system is no longer fit for purpose and certainly does not serve the needs of our great cities.”
He called for an end on caps to borrowing which prevent investment in assets like new housing and for cities to have freedom to raise taxes locally.
And he suggested that the lobbying campaign was beginning to work. “We are at an historic moment,” he said “At long last we may be about to see a reversal of the tide of centralisation that has been moving powers to Westminster since the early years of the last century.”
But the opposition Conservative group advocated caution over devolving tax raising powers to cities like Birmingham, suggesting that the controlling Labour groups would be tempted to raise them too high.
Deputy leader Coun Robert Alden (Cons, Erdington) said: “We have the prospect of local income taxes, VAT, congestion charges. We wouldn’t want to use those powers but to protect hard working families and business in the city.”
Coun Meirion Jenkins (Cons, Sutton Four Oaks) went further saying: “Additional taxes would be a retrograde step for our city.”
And Liberal Democrat deputy leader Coun Jon Hunt (Perry Barr) said that while welcoming devolution it would be better if it happened ‘organically’ rather than government or a group prescribing a model.
“We believe in giving people power over their own destiny,” he added.
Meanwhile, Coun John Clancy (Lab, Quinton), who is expected to challenge Sir Albert for Labour group leadership after next month’s local election, said that while he supports the campaign, such changes in city finance could be a long way off.
He said: “The thing we need to know is how long this will take. When Tarzan (Heseltine) asked for £40 billion, he got £2 billion.”
Instead he advocated using the £220 billion tied up in local government pension schemes to support investment in cities and local economies.