The creation of a West Midland or 鈥淕reater Birmingham鈥 combined authority has moved a step closer as Labour leader Ed Miliband announces plans to let combined authorities keep a share of local business rates.
New business rate income resulting from economic growth will be kept by local councils under a Labour government, rather than simply handed to the Treasury as usually happens now.
But the policy will only apply to combined authorities, such as the Greater Manchester authority or the combined authorities created earlier this year in the North East, West Yorkshire, South Yorkshire and Merseyside.
The West Midlands will miss out on the money unless councils in the region can agree to form a new body.
Birmingham City Council has begun talks with neighbouring councils including in Solihull and the Black Country about creating a combined authority to take charge of issues such as economic development, but the talks are at a very early stage and there has been no agreement so far about whether to go ahead.
Councils nationwide currently receive 拢22bn a year in business rates.
Each authority鈥檚 current contribution to the Treasury will remain as it is, adjusted each year for inflation, but councils which collect higher sums in the future - suggesting new firms have been founded or moved in to the areas - will keep the difference. There will be no extra cost to employers.
Other Labour proposals include聽 stripping Whitehall departments of 拢30bn currently spent on housing, transport, business support, employment and adult skills, and distributing the money over five years to councils and local enterprise partnerships, the economic development agencies set up by the Government which are led by councillors and business leaders.
The 拢6 billion-a-year fund would replace the Government鈥檚 local growth fund, worth 拢2 billion a year, which is due to begin distributing money next year.
Labour also plans to reform England鈥檚 39 Local Enterprise Partnerships to reduce their number while giving them responsibility for skills and the Work Programme, the Government鈥檚 scheme to help unemployed people into work.
Mr Miliband is set to say: 鈥淚f we are to create the wealth of the future and solve the cost of living crisis, we must help create high-quality private-sector jobs not just in one part of Britain, but in every part of Britain."
Announcing the new policy in Leeds, he will add: 鈥淭he next Labour Government will ensure city and county regions, like this powerhouse economy in Leeds, get control of business rates revenue.
鈥淪o that any extra money raised here thanks to the efforts of you and everyone in this great city can be invested here.鈥
The proposals follow a review of economic policy by Labour peer Lord Adonis.
Labour is still considering whether to adopt other policies recommended by Lord Adonis, which include establishing at least 100 new University Technical Colleges, which focus on technical and scientific skills.
Lord Adonis also backs the idea of 鈥渃ity region鈥 or conurbation mayors for combined authorities, but only once the authorities are up and running successfully.
