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Last Updated: Friday, 15 June 2007, 16:36 GMT 17:36 UK
Tory proposals to shake-up cities
Bullring shopping centre, Birmingham
Cities are "suffocated" by central government, Lord Heseltine says
English cities need powerful elected leaders with the ability to raise cash on the open market by issuing bonds, the Tories say in a new report.

Lord Heseltine called for a "massive transfer of power" to local government.

He said control of the 11bn the government spends each year on regeneration should be handed from unelected "quangos" to elected leaders.

The ex-deputy PM was asked to draw up policy ideas on inner city regeneration by Tory leader David Cameron.

His Cities Taskforce report was launched earlier in Bristol.

In it he calls for directly elected leaders to serve a four-year fixed term, paid a salary "commensurate with the level of responsibility" and subject to "loose scrutiny" by an elected assembly.

Bonds proposal

They would have powers over transport, fire services and welfare, as well as direct oversight of the police.

He said they would take on the powers and budgets of regional development agencies, learning and skills councils and regional assemblies, including 10bn a year of European funding.

And they could raise funds through bonds, borrowing on the open market and allowing authorities to keep the business rates paid by firms in their first five years.

The quango state responds to Whitehall diktats, not to local people's votes
Lord Heseltine

London Mayor Ken Livingstone wanted to issue bonds to fund improvements to London Underground but was overruled by Chancellor Gordon Brown who favoured a public private partnership deal.

Lord Heseltine said local government had been "emasculated", leaving English cities unable to lead their own renaissance.

"The quango state responds to Whitehall diktats, not to local people's votes," he said.

Low turnouts

Elected mayors were a key plank of Labour's plans to shake-up local democracy but take-up has been patchy.

Twelve areas voted for mayors in referendums but 22 others - including Tony Blair's Sedgefield constituency - rejected them.

Asked whether there was an appetite for more powerful local leaders, Lord Heseltine told BBC Radio 4's Today programme: "One of the reasons why people don't want to stand in the present circumstances is local government doesn't have the power.

Lord Heseltine and David Cameron
David Cameron is studying Lord Heseltine's proposals

"It's totally suffocated by ring-fenced grants and by the central government machine. If you really want powerful local communities you have got to let them have power and let them make decisions."

He said he would not recommend a referendum on the issue, as turnouts were often very low and the issues misleading, he said an opposition party could put forward to the people "as a mandate in a general election".

Sally Low, of the British Chambers of Commerce, welcomed the proposal to let city governments keep business rates paid by firms in their first five years.

'Unlock powers'

She said it could "act as a powerful incentive to local authorities to promote business start-ups and foster real enterprise in their areas, rather than merely treat business as a cash cow".

And Dermot Finch, of the Institute for Public Policy Research, said directly elected mayors would "help England's big cities unlock the powers they need to deliver regeneration, improve transport, and spark further economic growth".

The plans are not official Conservative policy but local government and businesses will now be consulted over the recommendations.

At the event in Bristol, David Cameron said he welcomed the "deep and wide ranging" reforms proposed.

He added: "I don't support everything they propose, there will be recommendations we may not take up."

But he said he welcomed proposals on slashing "unaccountable regional bureaucracies", bond finance and elected mayors for the major cities.

He added: "A city, like a nation, needs a single individual at the top, someone everyone knows is ultimately in charge, and who is directly responsible to the citizens for the state of their community."

Tories launch cities' task force
06 Mar 06 |  Politics
Cities 'need tax-raising mayors'
22 Feb 06 |  Politics

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