Birmingham is to lead a revolution in local government by seizing responsibility for economic development and the lion’s share of a £200 million budget that goes with it.
The city council is to take the Government up on its offer of creating a “local enterprise partnership” which would replace regional quango Advantage West Midlands.
It would give the council, in partnership with neighbouring authorities, control of local economic policy and a huge budget boost.
In an interview with the Birmingham Post, Local Government Secretary Eric Pickles said he was ready to hand over the cash currently distributed by AWM – but only if the council could convince business leaders to support the proposal.
There was also a victory of sorts for city council leader Mike Whitby, as Mr Pickles revealed plans to introduce a directly elected mayor on the city may be delayed because of the financial crisis.
“We have to bear in mind the cost of any reorganisation,” he said.
The national Conservative Party pledged in opposition to force Birmingham and 11 other cities to hold referenda on creating directly-elected mayors, even though the policy was vehemently opposed by Coun Whitby, Tory leader of Birmingham City Council.
But for now the Government has avoided an immediate clash with the local authority, which is poised instead to take full advantage of plans to devolve power and funding to councils.
The Queen’s Speech included plans for a Decentralisation and Localism Bill, which will create “joint local authority-business bodies bought forward by local authorities to promote local economic development”.
They will be called Local Enterprise Partnerships and documents published by the Government to accompany the Queen’s Speech make it clear that they will “replace Regional Development Agencies”.
Birmingham City Council officials said the authority would apply to create a Local Enterprise Partnership along with partners in neighbouring authorities such as Solihull and the Black Country councils.
A spokesman highlighted a motion passed unanimously by a meeting of the full council last July, which called on the council to create an economic board to support the local economy and to control the budget currently managed by Advantage West Midlands.
This gave the authority a mandate to set up a local enterprise partnership, the spokesman said.
But the move would put the council on collision course with the business community, including Birmingham Chamber of Commerce, which wants the existing quango to stay.
In order to get its hands on Advantage West Midlands’ money, the authority will have to prove to the Government that it has convinced employers to “buy in” to its plans, Mr Pickles said.
Advantage West Midlands spent £296 million in the last financial year, although this has been slashed to £202 million in the 2010-11 financial year, and is likely to be cut again as a result of a £6.2 billion public spending cull announced by the new Government.
In an interview with the Financial Times last week, Liberal Democrat Vince Cable, the new Business Secretary, said regional development agencies would stay where they were popular – and cited Advantage West Midlands as an example of an agency that could survive.
But Mr Pickles, a Conservative, said it would be scrapped if local councils could convince industry to back their proposals.
“The basic rule is that if local authorities wish to set up real economic areas, and can show that they are co-operating together, and can show that there is buy-in from local business, then local authorities will get those sums.”
He added: “It certainly wouldn’t be our intention, nor would it be Vince’s intention, for us to ride roughshod over local opinion.”
Mr Pickles highlighted plans to take control over planning and housing strategy away from regional bodies and give it back to councils, saying: “The balance of power in this country is going to shift towards the local level.”
He also suggested plans for big city mayors would go ahead, but not immediately.
“We are going to have a spending review that’s going to be very difficult. We’ve got to be able to weigh the balances in terms of burdens.
“I am writing to cabinet colleagues via the Chancellor to make sure that we do not inadvertently put new burdens on local authorities, and find ourselves closing off things they can do, because by a process of bad serendipity they find themselves in a process of having to do all sorts of new things.”
Pressed on whether a referendum would be held in May 2011, as originally planned, he said: “I don’t know whether it’s going to be next May.
“We need to weigh those balances very carefully. There is a commitment to do this, we will move towards it.”
Who would be mayor? Page 4