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Last Updated: Wednesday, 22 February 2006, 12:33 GMT
Cities 'need tax-raising mayors'
Bullring shopping centre, Birmingham
Cities such as Birmingham have their 'hands tied', the report says
Elected mayors with tax-raising and spending powers are needed to boost trade in England's biggest "city regions", a think tank says.

The Institute for Public Policy Research says they should be introduced first in the West Midlands and in Greater Manchester.

The IPPR says the mayors, who could also be chosen in other cities, should run transport and regeneration.

The government said it was looking "very closely" at the idea.

'Clear leadership'

The IPPR report - called City Leadership - says elected, tax-raising mayors could eventually be seen in other "city areas", such as Liverpool, Bristol, Leeds and Newcastle.

Evidence from places such as Bilbao in Spain and Portland in the US shows this can improve economic performance and political accountability, it says.

The report adds: "Cities are drivers of the national economy. Better economic development policies are what they need to fulfil their potential.

"So it is critical that they have the right level of fiscal freedom to achieve their goals."

It kick-starts the debate but there are still many questions to which the business community wants answers
David Frost
British Chambers of Commerce

It says England's cities have their hands tied by some of the "smallest local revenue raising powers in the developed world".

However, the report acknowledges that city-regions are a "hard sell - a difficult economic concept, and a political minefield".

To succeed, they must be "accountable to their residents and businesses".

IPPR spokesman Dermot Finch said: "Directly elected mayors will be controversial but they provide clear leadership and a visible line of accountability, as Ken Livingstone has shown in London."

Around 1.2bn should be switched to mayors from the Regional Development Agencies, Transport Boards and the Learning and Skills Council, the IPPR recommends.

This should also be topped up by a 5% levy on business rates, expected to raise 35 million, it adds.

David Frost, director general of the British Chambers of Commerce, said: "This report is right to identify cities as economic powerhouses.

"It kick-starts the debate but there are still many questions to which the business community wants answers."

Sir Michael Lyons, heading the official inquiry into council tax and the role of local government, said the IPPR study was "important and welcome".

Chester and Derby?

"I don't agree with all of its conclusions but we must consider accountability issues alongside questions of what local government should do and how it should be paid for," he said.

Local Government Association Regeneration Board chairman Chris White said: "Greater freedoms for our big cities are needed and necessary, but what about the Chesters and the Derbys?

"There's a real danger that smaller cities, suburban and rural areas could end up being neglected."

The powers the IPPR envisaged for Manchester and Birmingham "should be made available to all councils, not just a select few", he added.

A spokesman for the Office of the Deputy Prime Minister said: "The government is convinced that strong leadership for our cities is essential if they are to achieve their potential, economically and socially.

"We recognise that directly elected mayors are one option for delivering this."

He added that "at this stage we are not ruling out, or in, any specific propositions - including those put forward in this IPPR report."

Liberal Democrat local government spokeswoman Sarah Teather said: "Councils in every part of Britain, not just in our cities, need financial freedom to drive economic development, and deliver the public services local people want.

"But freedom also means freedom to choose what system of government local people want. Decentralisation is about devolving power, not imposing a one-size fits all solution from above."

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