Birmingham business leaders have successfully pleaded for a limit on the number of lap dancing and strip clubs allowed to operate in the city centre, claiming that a recent flurry of applications for new venues would deter investment and harm the city’s reputation.

They have called for a total limit of two clubs in Broad Street to be included in the city council’s new policy on sexual entertainment venues even though there are currently four operating in the area.

Birmingham’s licensing committee was split over whether or not to set a city-wide limit, compromised on guideline limits for various localities including Broad Street and Hurst Street.

They partially rejected the advice of council lawyers who argued against setting any limit at all, claiming it would leave them completely free to approve or reject any club.

New powers, which will be introduced during 2011, give the city council almost unbridled control over the operation of strip clubs, including the ability to delve into the backgrounds of owners and managers to ensure they are suitable operators.

Calls for a Broad Street limit follows the doubling of strip club licences in recent weeks, with the two long established venues, The Rocket Club and Legs 11 joined by the Boujee Rooms and Cyclone Club.

Geoff Fenlan, general manager of the ICC and NIA, said visitors to city conferences generate £369 million a year for the local economy but this was at risk.

He said: “If we continue to get a saturation in Broad Street we will create the perception of a red light district and I will start to lose business,” he said.

Gary Taylor, chairman of Broad Street Business Improvement District, added: “We want new investment, more hotels, more restaurants, a better mix of venues. While some of that has been stopped by the economic climate the big change has been an increase in lap dancing venues.

“More strip clubs will increase the number of single sex groups and lead to crime and disorder. It will put off investment in the city.”

Five members of the licensing committee, including Liberal Democrat chairman David Osborne, were opposed to setting a limit.

Coun Osborne (South Yardley), backed by council lawyers, said that he did not want to be ‘fettered’ by any limit set now as it could leave the council open to a judicial review if they refuse a club below the limit.

But councillor Nigel Dawkins (Con Bournville) pointed out that no limit whatsoever left businesses in the dark over what would be acceptable.

He said: “This policy is a huge change. We’ve gone from one extreme where we could do nothing to stop these clubs and now we can stop them dead. We have discretionary powers with no right of appeal.

“I think we have to give some guidance as to how we would exercise our powers, not least for those businesses who are making applications.”

His suggestion of guidance on how many clubs would be acceptable, rather than a strict cap, was accepted by a majority of the committee, mainly Labour and Conservative councillors.

A limit on the number of clubs will be set in the next few months.