The West Midlands will miss out on millions of pounds of investment and thousands of new jobs after it was snubbed in the race to become the country’s first City Region.
Chancellor Alistair Darling will announce later today that Manchester and Leeds are to be given the status – and with it economic autonomy – ahead of the West Midlands scheme, which was led by Birmingham.
Last night, the deputy leader of Birmingham City Council, Paul Tilsley, described the decision as “appalling” and a “real kick in the teeth”.
He added: “We are in the middle of an economic crisis and Birmingham has been affected more by this economic downturn than any other part of the country. It’s an appalling decision and we will fight tooth and nail against it.
“This shows the poor regard that this Government holds this region in. This is a real kick in the teeth from the Government who actively encouraged us to go for this status.
“I sincerely hope that the Labour MPs in the West Midlands kick up a stink and do all they can to change the Government’s mind.”
The plan would have allowed the seven local councils to raise cash themselves, instead of depending on handouts from Whitehall.
The status would also have made vital funds available for the long-awaited extension of the Midlands Metro light rail system, M5 improvements and a light rail service between central Birmingham and Birmingham International Airport, which will cost an estimated £1 billion.
Earlier this week Birmingham’s council leader, Mike Whitby, made a final plea to the chancellor to back the project saying that it would also create up to 44,000 jobs.
The seven metropolitan authorities, led by Birmingham, were among 14 partnerships across England that asked for the new powers.
The scheme would have allowed the West Midlands to set up AccelerateDevelopment Zones – defined areas in cities and towns where councils are allowed to keep business rates from firms moving into the area for a period of 25 years.
They would have been able to borrow money for major projects producing millions of pounds to boost economic development.
Once the schemes are completedthey would claw in the extra business rates to pay back the loans. Forexample, by extending the BlackCountry Metro from Wednesbury to Brierley Hill and Stourbridge, they would attract new employers into the area, leading to an increase in the business rates paid.
Under the current arrangements local councils pay the rates back to the Treasury and cannot use the money on local schemes.
The City Region board would have also assumed control of skills training and employment strategy.
There was backing from councillors and business leaders.
Letters of support from Chambers of Commerce and CBI in the WestMidlands also went to the chancellor, business secretary Lord Mandelsonand Hazel Blears, the communities and local government secretary.