Councils in the West Midlands must share money and “sovereignty” in order to receive more freedom from Whitehall, Local Government Secretary Eric Pickles has told civic leaders.

He was speaking at a fringe meeting at the Conservative Party conference in Birmingham, attended by city council leader Mike Whitby.

Coun Whitby recently called for greater authority for local councils, complaining in a magazine interview that both Labour and Conservative governments at Westminster had centralised power in London.

Mr Pickles said he wanted to return to the days of Joseph Chamberlain, the reforming Victorian mayor of Birmingham, who was able to make decisions without “looking over his shoulder” at central government.

And he also promised to reverse the creation of “regional” bodies under Labour, which cover a greater West Midlands area containing Worcestershire, Herefordshire and Staffordshire as well as Birmingham, Coventry and the Black Country.

But he warned that authorities must be willing to work more closely together and make joint decisions.

Mr Pickles said: “We are actively looking towards urban areas like Birmingham to be a generator of our economic power, and empowerment to the citizens they cover.

“We want to see the end of the ridiculous nature of regional government. We want to put government into the hands of the people around real economic areas.

“We are looking towards seeing, right across the West Midlands and beyond, for co-operation between local authorities.

“We are looking at them to start to work naturally together, to share money, to share sovereignty, so that real substantial powers can be devolved to a mighty city like Birmingham.”

Hailing improvements to Birmingham city centre, Mr Pickles said: “Birmingham is a terrific place to visit now. It is a terrific place to bring up your kids. It is a terrific place to have a business.”

Mr Pickles said of Joseph Chamberlain: “He and his fellow councillors built up the second city of the United Kingdom to be the powerhouse of the United Kingdom, without having to look over his shoulder every so often for the consent of the Secretary of State.

“It is that kind of devolution that we should set our sights towards.”

Mike Whitby, leader of Birmingham City Council, said: “All of the political leaders of the core cities have been debating with the current Government, and we will debate with any government, about the significance of cities.

“How, in fact, they are not the problem. How they are the solution of many of the United Kingdom’s problems.”

He told delegates: “This city with it’s £3.2 billion budget was, sadly, underperforming. It was an underperforming city, renowned for its mediocrity.”

But the city had now been given a high “three star” rating by the Audit Commission, he said.