Britain has to depend on major cities such as Birmingham to revive the economy, Deputy Prime Minister Nick Clegg has insisted.
In a major speech, he claimed that regions across Britain had depended on “handouts” from London - but that money has run out.
Mr Clegg was announcing an expansion of the Government’s “city deal” programme. Ministers have signed a deal signed with Birmingham promising a new £25 million medical research centre in Edgabston, and establishing a £1.5 billion fund to support the local economy with funding from the Government, local councils and the European Union.
The aim is to let local councils and business leaders spend money which used to be managed by civil servants in Whitehall, on the grounds that they know how to create jobs in the region.
And Ministers are now inviting other cities and regions, including the Black Country and Coventry, to come up with their own plans for “city deals”.
Mr Clegg said: “You can’t revive the regions just through handouts from Whitehall. Certainly not now, when the Treasury’s coffers are bare.
“And even if we did have lots of money, the previous approach was fundamentally flawed.
“Revenues from the financial services sector were recycled round the rest of the country through the long arm of the state, creating the illusion of strong, national growth.”
Instead, the Government was providing “the freedom for cities to carve out their own economic destinies”.
But he admitted attempts to give more power to the big cities had been undermined by Whitehall officials who want to keep control of their “empires”.
Lord Heseltine, the Deputy Prime Minister, is due to publish his own plans to create jobs in Britain’s major cities on Wednesday.
His proposals include moving thousands of civil servants be moved out of London - and making it harder for foreign companies to take over major British firm.
This is partly a response to concern about American food giant Kraft’s takeover of Birmingham-based confectionary manufacturer Cadbury.
He will call for Local Enterprise Partnerships - which involve local councils and chambers of commerce - to have more funding and responsibilities.