The race to become Birmingham’s first elected mayor sparked into life as Labour veteran Sir Albert Bore unveiled his intention to run for office.

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Sir Albert’s decision will signal the start of a dramatic internal fight within Labour with the former city leader going head to head for the party’s nomination with ex-Erdington MP Sion Simon.

The announcement comes as Tory leader David Cameron delivered a body blow to Mike Whitby, the council’s Conservative leader and a likely mayoral candidate, by suggesting he favoured a figure “from outside politics” from industry or the voluntary sector.

The battle to become Birmingham’s all-powerful mayor began in earnest in the run-up to the publication of the Government’s Localism Bill, which will set out how a directly-elected mayor will be chosen.

Sir Albert, who led Birmingham City Council between 1999 and 2004 and heads the Labour opposition group on the city council, insisted he was in the running for the chance to become Birmingham’s answer to London mayor Boris Johnson.

Mr Simon had been the only publicly-declared candidate for the post after announcing last year he was standing down from the House of Commons to concentrate on his mayoral ambitions.

Sir Albert, who will be seen as a heavyweight contender, said: “I think if there was a referendum in Birmingham next year then there will be a majority for an elected mayor. And in the circumstances, I will be seriously considering putting myself forward.

“I have been in favour of an elected mayor for 10 years and I support the idea that the people of Birmingham should decide what form of local government they want.”

In his interview, Mr Simon puts economic development and job creation at the heart of his campaign.

He says: “The UK constituencies with the highest rate of unemployment are all in Birmingham. That’s not a problem for Ministers in London. They don’t care. If an elected mayor doesn’t take responsibility for this, then who can?”

Birmingham has been run by a Conservative and Liberal Democrat partnership since 2004 but if a mayoral election is held in 2012, mid-way through the coalition Government’s term of office, whoever wins the Labour nomination would stand a good chance of becoming mayor.

Mr Cameron said he wanted the public to help decide the Conservative candidates in mayoral elections.

He said: “I would hope my party would look at ways of getting very wide participation. That’s what we did with Boris Johnson in London. It was a proper, open primary system. So we will certainly be looking at models to get people involved.

“My view is that great cities need great leadership and there are great leaders to be found outside politics. Hopefully, we can encourage people from the best of the commercial world, from public service, from the voluntary sector to come forward, as we demonstrate that these new mayors are going to have real power, real teeth and that will attract good people.”

Under Mr Cameron’s leadership, the Conservative Party has also sought to encourage people from outside politics to stand as MPs.

But the policy has been controversial among some party activists, who felt hard-working local councillors and party stalwarts were being sidelined.

Mr Cameron has stated in the past he believes Mike Whitby would make a good mayor.

Coun Whitby said: “This is a topic of which there has been much speculation and is obviously a matter for central government to decide upon. However it will clearly have important implications for our great city and we rightfully will have our say, as should the people of Birmingham.

“I have always agreed with the Prime Minister that local government needs to be praised when we get things right and held to account when we get things wrong – as we are already.”

Birmingham’s Tory group deputy leader Philip Parkin said the city council was packed with potential elected mayors, not least Coun Whitby.

He said he doubted Mr Cameron meant a slight to Coun Whitby when he suggested business leaders would make good Tory candidates.

Coun Parkin (Sutton Trinity) said: “The whole issue of elected mayors is mired in confusion. We have been told different things about when the referendum would be and whether we would get the mayor first and the referendum later.

“I think that Mike Whitby would make an excellent mayor. He has got so many things right in Birmingham – low council tax and high satisfaction rates.

“The only thing holding us back is that we have not had the power to do all we want to do.”

Liberal Democrat MP John Hemming (Yardley), a sceptic about mayors, has said he would be interested in standing if the position was created.

The Government’s Localism Bill is expected to confirm that referenda will be held in England’s 12 largest cities, including Birmingham and Coventry, to ask residents whether they want to transform local government by creating a powerful, directly-elected mayor.

The Bill, which had been due this week, was delayed at the last moment.

Reports suggest the postponement was due to ongoing disputes between Government departments over the powers a mayor would receive.

However, the Department for Communities and Local Government insisted the delay was simply due to the need to find time in the Parliamentary timetable for the Bill to be heard.