Powers over boosting the West Midlands’ adult skills have been granted to the City Region by the Chancellor – making it one of only three areas with that level of devolved power.

Alistair Darling revealed that the collection of local authorities and agencies from the region would have new responsibilities to set the priorities for adult skills funding in his Budget.

However, the Chancellor’s announcement that an extra 20,000 university places will be created for this autumn has been rejected by academics because there are “strings attached”.

Mike Whitby, leader of Birmingham City Council, who chairs the City Region board, said it was a “significant move” for the future of the City Region, which lost out to Manchester and Leeds in the race to be given economic autonomy last year.

He said: “We are working in an innovative way with our private sector partners to deliver real change, and I hope that this will be one of many announcements coming out of our partnership in the near future.

“Building upon our ambitious plans for employment and skills and our proposals for new ways of supporting transport investment, we are also working hard to enhance our collective Inward Investment offer as well as creating financial savings through exploring joint procurement opportunities.”

The City Region is a partnership between the local authorities of Birmingham, Dudley, Sandwell, Solihull, Walsall and Wolverhampton along with the West Midlands Regional Assembly, Advantage West Midlands and the Learning and Skills Council.

Its employment and skills board, led by the private sector and working with regional partners, will now set the skills strategies for funding bodies to follow under the new agreement.

Meanwhile, the Chancellor announced an extra 20,000 university places will be made available for this autumn in a bid to cope with a surge in demand.

The places, which will be mainly for students studying science, technology, engineering and maths subjects, will be paid for out of a one-off £270 million University Modernisation Fund.

It comes following fears that hundreds of thousands of students could miss out on places this autumn, as universities face a record rise in applications.

But Steven McCabe, director of research degree programmes at Birmingham City University, said universities were being asked to find savings to take on more students.

He said: “There has obviously been a recognition that training and investment in research and development is crucial to support future development in the knowledge-based economy.

“Accordingly, the creation of 20,000 new university places in science, engineering and maths makes a good headline until you discover that institutions which take on these additional students must make savings elsewhere.

“The £35 million enterprise fund to help university-launched businesses is perhaps one that is genuinely intended to stimulate growth without having any ‘strings attached’.”

Institution of Civil Engineers director general Tom Foulkes added: “As we make the shift towards a low carbon economy there will be a growing need for skilled engineers in emerging technologies, especially within the energy sector. Skills shortages have already been identified in key areas including offshore wind, nuclear energy and marine and tidal technologies and in the interim we will have to import engineers to fill these gaps.

“The additional university places in the Budget will help plug this gap and ensure we are well-equipped to deliver a new generation of low carbon infrastructure, however universities must also receive sustained long-term funding over and beyond this announcement.

“There is little point however in investing in skills if there are no jobs for the future graduates to go to.”