An independent commission should decide how funding for local councils is distributed – to ensure major cities such as Birmingham aren’t unfairly targeted by cuts, an MP has said.

Gisela Stuart (Lab Birmingham Edgbaston) proposed new laws in the House of Commons to reform local authority funding the day after Parliament hosted an exhibition showcasing the best of Birmingham.

City leaders in education, business, healthcare, politics and more took part in an event dubbed Birmingham Day in the heart of Westminster.

Organised by Ms Stuart and backed by MPs from all parties, the exhibition in a Commons meeting room involved stalls staffed by representatives of city businesses and institutions, each highlighting a different way in which Birmingham contributes to the United Kingdom – and leads the world.

Music was provided by a quartet from Birmingham Chamber of Commerce and hip-hop artists Sic’nis and Madflow, who work with black-led arts centre The Drum.

Those attending included MPs from across the West Midlands and elsewhere, a Government Minister, and the Bishop of Birmingham the Rev David Urquhart.

But Ms Stuart warned that attempts to help big cities play an even bigger role in growing the UK economy were undermined by unfair cuts in local government.

She said in a Commons speech: “They are the engines of economic growth. And you don’t go for growth by switching off the engine.

“Cities don’t follow the national economy – they are the national economy.”

The Government needed to decentralise funding to local authorities so that they could promote economic growth, she said.

“In England – London and the South East have steadily increased, the East of England and the South West has remained roughly level, and all the other regions to the north of that line have and continue to decline.

“That trend cannot be allowed to continue. Allowing the south to overheat and the Midlands and the North to be drained of energy is bad for the whole country.”

Ms Stuart warned: “It is wrong to have the largest cuts in areas where the jobs a fewest.

“It is wrong to have a situation where the National Audit Office warns that 12 per cent of councils are at risk of being unable to balance their books in the future, with potentially disastrous consequences.”

An independent commission should look at how central government funding is distributed – but also look at ways that cities could keep more of the money they raise themselves, she said.

“Yesterday Birmingham came to the Jubilee Room to show what the city has to offer. Food, music, ideas, energy and diversity. We still make things in Birmingham, but the future could look bleak.

“The total gross annual expenditure of the city council is £3.41 billion. Over the last three years our spending power has reduced by 13 per cent compared with a national average 9.3 per cent. There is something just not right here.

“Every man, woman and child in Birmingham has had £149 each taken from the money given by the government. In prosperous Wokingham in Berkshire they lost just £19 a head. That can’t be fair.”

Her proposal was backed by Labour MPs from Birmingham, Newcastle and elsewhere but is unlikely to become law without Government support.

Exhibitors at the Birmingham Day event included University Hospital Birmingham, which highlighted the work of staff at the Queen Elizabeth Hospital in developing new medical technology which is used across the world.

Birmingham City University had a stand highlighting Birmingham’s continuing role as a centre for manufacturing and design of new products. Examples included whistles created by Acme, in Hockley, which supplies whistles to Fifa and police forces in the UK and US. The University of Birmingham highlighted its work developing “liquid air” technology to store energy. This involves cooling air to very low temperatures so that it condenses into liquid. Energy can be released by allowing the air to heat up, so that it expands rapidly.

The technology allows for greater use of renewable energy sources.

The Institute of Asian Businesses and Saltley Business Association highlighted Birmingham’s role in the textile industry, proving clothing including stunning wedding outfits to British Asians across the country.

Cities Minister Greg Clark said as he visited the exhibition: “It is a fantastic event. It really brings home the sheer breadth of excellence in the city, and what it has to offer.

“It is really making an impact on MPs. It’s created a buzz at Westminster.”