England’s largest cities could be handed a range of new powers under so-called bespoke “City Deals”, the Deputy Prime Minister has said.

Nick Clegg also promised that the government would look to roll out the process to other cities in due course.

The Deputy Prime Minister said the first deals would be done with the eight largest cities outside London – Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield – and their Local Enterprise Partnerships.

The government’s publication, Unlocking growth in cities, set out “an illustrative menu of bold options”. It insisted that the proposals would lead to a “fundamental shift in the relationship between national government and cities – starting with a genuine transfer of power”.

Key proposals include:

• Cities having one consolidated capital pot “to direct as they see fit”. This would replace multiple funding streams
• Local authorities having the freedom to set lower business rates for certain types of company. There would be opportunities to match this through Regional Growth Fund bids
• The creation of Business Improvement Partnerships – where there is local business support – with the power to generate revenues to support growth across the economic area
• Access to new infrastructure funding through Tax Increment Funding where this is spent on economic development projects, “in line with the Local Government Resource Review”
• Recognition of the benefits for local authorities that opt to pool business rates across their LEP
• Devolution of local transport major funding. “The Government will want to look at ways of increasing local accountability for local public transport, building on models like Transport for London”
• An increase in cities’ control over rail services through the devolution of responsibility for commissioning local and/or regional rail services, “including the management of franchise arrangements”
• The development of greater accountability to local communities for local bus services, “in the context of wider Bus Service Operators Grant reform”
• Enabling cities to integrate use of public sector buildings and generate savings by vesting local public sector assets in a single local property company, “with receipts invested in local economic development”
• Cities having greater responsibility over regeneration funding and responsibilities through the devolution of functions and spending currently held by the Homes & Communities Agency
• Giving cities greater planning freedoms, including devolution of non-planning consents
• Granting LEPs statutory consultee status for planning proposals
• A £100m capital investment pot for competitive bids for broadband infrastructure plans
• The establishment of City Apprenticeship Hubs, which will handle the administration and paperwork for apprenticeships
• Creation of a City Skills Fund to enable cities and colleges to work together to tailor the provision of adult skills
• Giving cities the opportunity to drive local employment and skills, for example by delivering services aimed at getting people back to work “under one roof where it makes sense to do so”
• Allowing cities to expand existing Department for Work and Pensions contracts, such as the Work Programme Contract, to include other wraparound services
• UK Trade and Investment working with cities to develop their offer to international business
• An enhanced programme of support for 16-17 year olds at high risk of disadvantage.

The Department for Communities and Local Government warned that, “as with any deal”, cities would have to offer something in return for new powers and funding.

It added: “For example, cities must guarantee that they can provide strong and accountable leadership, improve efficiency and outcomes, and be innovative in their approach.”

The Unlocking growth in cities publication also warned that cities would have to be willing to take on proportionate risks.

Clegg said: "Cities are the engines of economic growth. Whitehall should not be like an overbearing parent, throwing money at cities but refusing to let them stand on their own two feet. So we will have a bonfire of Whitehall controls to empower our cities to go for growth.

"We need our cities to be economic, social and cultural magnets - places people aspire to live. Firstly, cities will have greater freedom to invest in growth. Secondly, having power over transport, housing, broadband. Finally, the power to boost skills and jobs.”

Philip Hoult