This week, Birmingham has been celebrating the announcement it is to receive £400 million in funding for New Street. However, the city could have had a new station years ago if councils were given greater fiscal control, argues Dermot Finch, director of the Centre for Cities.

The announcement that the refurbishment of New Street Station has been given the go-ahead is fantastic news - and long overdue.

The upgrade will transform the welcome Birmingham is able to extend to all its visitors, and speed up journey times for everyone who lives and works there.

In the process, a great number of jobs will be created and regeneration will be given a boost.

Although the city centre has been transformed by a retail renaissance in recent years, Birmingham still faces significant economic challenges.

Almost 40 per cent of Birmingham's working age population is not in employment, and our annual Cities Outlook report ranks the city as the fourth most unequal in England.

The next wave of urban regeneration needs to do better at spreading growth and prosperity across the entire region - and better transport is a vital part of making this happen.

Plans for New Street have been on the table for years. And Birmingham is not alone in finding it difficult to lever in cash for infrastructure projects which are desperately needed.

It took 18 long years for London's Crossrail project to finally get the go-ahead last October. Why does it take us so long to make the improvements our cities' economies desperately need?

One reason is that every time a city wants to make a major transport investment, it has to go cap in hand to central government. Britain is one of the most centralised countries in the developed world - our cities and towns lack financial power and major decisions affecting them are too often taken by Whitehall.

Cities often find that the process of convincing the Department of Transport of the economic worth of large-scale projects is a long and complex task, even when so many local stakeholders are able to speak with one voice as they have done in Birmingham.

Cities need champions. Liam Byrne, as regional Minister, has certainly helped to bang the drum for New Street. And Mike Whitby's willingness to revisit the city council's original plans - and hammer out a compromise deal to secure the funding package for New Street - has been vital in securing the green light.

This has been a personal triumph for Whit-by, and will help silence his critics in the business community and elsewhere.

Many English cities go through annual coalition negotiations, which distract local leaders from getting the job done.

Elected Mayors with real strategic powers, such as Ken Livingstone has in London, would be one way of creating political stability in all England's cities - and extending leadership over 'real' city economies.

Why is it that only London has a measure of control over its own economic development policies and spending? More freedom for cities to raise and spend more of their own money would transform the way Britain gets things done. It would mean greater accountability, too - with the decisions made by local leaders more visible, perhaps bringing greater understanding of what councils do.

At the Centre for Cities, we've long argued that cities should be able to levy a supplement to local business rates, earmarked for specific local projects such as the New Street upgrade.

The idea was given the go-ahead by the Chancellor last year, and will be given its first test-drive as part of the Crossrail funding package.

Even small supplements could help plug major gaps in transport plans. A supplement of 2p across the West Midlands could raise £27.5 million annually - enough to underpin a far larger amount through prudent borrowing over a number of years. This would have reduced Birmingham's 'ask' to the Department for Transport, and could have meant the New Street project getting the go-ahead far sooner.

The same is true of the Midland Metro extension, another locally-backed proposal to help connect people across the region with jobs in Birmingham's city centre. New Street was funded by central government and regional development agency Advantage West Midlands. But Birmingham can't expect central government and the RDA to pay for all the other projects that the city needs.

Last summer's Sub-National Review of Economic Development and Regeneration paved the way for more powerful city-regions, and gave local councils new powers over economic development.

Faced with the prospect of tightened public spending, cities like Birmingham are likely to need to do more with less. In future, Birmingham will need to make the most of any new financial powers to generate more locally-raised funding for projects like this.

We've found a great deal of consensus on devolution amongst city leaders and businesses.

We recently surveyed local leaders and businesses, and found that nearly all of them agreed that the current economic infrastructure was not delivering what they needed. Over eight in ten of those who responded were in favour of using new local funding tools to help bridge investment gaps, and two-thirds expected their local authority to introduce business rate supplements at some point.

Ninety-two per cent agreed that businesses needed to have a clear say in how to tackle local transport and housing problems - something which would be required before a city could impose a supplement.

But here's the catch - the consensus begins to break down over whether cities should have specific tax-raising powers. While all are agreed that devolution is in principle a good thing, businesses don't always trust local authorities to spend their money effectively. Nearly half of local business leaders do not think local councils should have more taxraising powers for major projects, and three-quarters of businesses want a majority vote before any business rate supplements scheme is introduced in their area.

Given the improvement in local authority performance over the past decade, though, there's a clear need here to build up trust. This mutual lack of trust is getting in the way of more financial powers for cities, and could be a barrier to meaningful devolution in England.

Birmingham has set a good example by working in partnership with the private sector and putting forward plans for New Street station which very clearly set out the real, and sometimes hidden economic benefits to local businesses.

If more cities follow suit, trust between cities and the private sector should improve.