David Cameron has chosen Birmingham to pilot radical proposals to change the way local government works – and potentially handing the city a £1 billion jackpot.
The city will act as a test bed for plans drawn up by Michael Heseltine, the former Deputy Prime Minister, after he recommended that the “Greater Birmingham” region should be the first to put them into action.
Lord Heseltine will lead a team of civil servants seconded from the Department for Business, Innovation and Skills, working in Birmingham itself.
Local politicians Caroline Spelman, the MP for Meriden and a former cabinet minister, and Liberal Democrat MEP Phillip Bennion, will also join the task force.
They will come up with detailed proposals telling the Prime Minister exactly how the “Greater Birmingham” region would benefit if it received more funding, potentially coming to more than £1 billion, and the power to make decisions locally.
The bid is backed by city council leader Sir Albert Bore, and described as a “an unmissable opportunity” by Birmingham’s Chamber of Commerce.
It follows the publication of a 228-page report by Lord Heseltine on how government could support the economy, which called for a massive redistribution of funding and power from Whitehall to local bodies.
The report, which had been commissioned by Mr Cameron, was launched by the peer at Birmingham Town Hall. His ideas included axing dozens of government initiatives, saving a potential £49 billion over four years, which would be handed to Local Enterprise Partnerships.
They would become the leading bodies responsible for promoting economic growth in each sub-region.
Chambers of Commerce would be given an official role providing support for businesses. At the moment, chambers are private organisations which often develop links with local and national government but have no formal rights or responsibilities.
Birmingham was chosen for the pilot project after Mr Cameron met a delegation led by city council leader Sir Albert Bore in September, which included representatives from all three major parties as well as the business community.
The delegation was dubbed “team Birmingham” by Sir Albert.
Lord Heseltine is also understood to be close to Andy Street, the managing mirector of John Lewis, who chairs the Greater Birmingham and Solihull Local Enterprise Partnership, the body run by business leaders and councillors.
The formal proposal to use Birmingham as a test case was set out in a letter from Mr Street to the Prime Minister, in which he said: “My colleagues and I wish to move this agenda forward and we have invited Lord Heseltine to assist us in the work we have in mind.
"We intend to look at the opportunities that could arise here in our area were the government to pursue a more localist agenda, to consider what we might add to any expenditure from our own resources or by partnership with outside interests.”
A Downing Street spokesman said: "Lord Heseltine is independent of Government. He presented his report to Government at the end of October which we are now considering.
"We will reply to the letter in due course."
Sir Albert Bore, Leader of Birmingham City Council, said: “Lord Heseltine’s report ‘No Stone Unturned’ gave strong support for our call for a more localist approach.
"So we were determined to respond positively and to take forward his proposals immediately rather than waiting to be asked. That offer has been positively received.
"By working together across the city region and forging a close partnership with business leaders we are ensuring that Birmingham plays its rightful role in bringing powers and resources back to our cities and city regions.”
Jerry Blackett, chief executive of Birmingham Chamber Group, said: “We expect to work with service providers and Lord Heseltine to build a business case that makes clear the jobs and wealth creation targets achievable in the Greater Birmingham and Solihull Local Enterprise Partnership area when better sign-posting is delivered.”
He added: “The private sector should regard this as an unmissable opportunity to make a difference to unleash wealth creation and to empower local communities to improve dramatically the life chances of those living in some of the UK’s most deprived communities.”
Under Lord Heseltine’s proposals, LEPs would bid for funding for specific projects in line with a national economic strategy drawn up by a new National Growth Council chaired by the Prime Minister.
In turn, the council would work closely with Industry Councils representing each sector of the economy, based on the Automotive Council which already exists to represent the automotive sector.