The region's business community last night said the debate on the creation of a powerful city region, possibly led by an elected mayor, should not falter.

The call came as the Government appeared to be on the brink of a U-turn on whether locally accountable city mayors were the best way forward outside London.

It followed a rejection of the city mayor concept by the eight "core cities" including Birmingham that Ministers believed might be suitable to go down the capital route.

The Institute of Directors (IoD) last night re-iterated its support for an elected Birmingham city mayor to help "punch our weight" on the world stage.

And business lobby group the CBI said it still wanted to keep discussions about wider city region proposals on the table.

"There is still a lot of flesh to put on the bone," said Chris Clifford, regional director of the CBI.

"The Government have no firm proposals about it. They have said they would like to see the elected mayor model. It is something that would get support initially here. But also we have the executive board route. In theory that would help but it depends what powers they would have.

"If it didn't do what it says it should then the private sector would pull away from it."

Mr Clifford also warned about creating extra layers of bureaucracy through another layer of local government.

City regions and the possibility of an elected mayor were pushed under previous Local Government Minister David Miliband.

The drive was motivated by a feeling that Britain's regions are not as strong as they should be, particularly in comparison to the capital.

Success of the London experiment under Ken Livingstone has convinced Whitehall that a locally-elected, accountable, heavyweight figure would help get things moving in the regions.

>> John James puts the case for elected mayors. Click here.

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