The Government published a report today called Unlocking Growth In Cities (641kb/34 pages), which outlines the proposals.
The proposals include consolidated funding for cities, rather than using the current bidding system; allowing councils control of business rates, and making tax increment financing (TIF) available for all councils.
With an aim of making it easier for cities to invest in growth, the Government has proposed to give cities one consolidated capital fund to spend on projects such as roads and housing. This would replace the current system of inviting councils to bid for funding from different Whitehall departments, dependent on the purpose.
The Government has proposed to allow local authorities to set their own business rates for certain types of company. It is hoped that this would allow cities to lower the business rates for companies that it would like to attract and would give them more control in shaping their city.
However, there is concern that Government's business rates proposals are not favourable for councils.
"On business rates and the resource review, there is no guarantee for councils that they will not lose out financially and that there will be proper redistribution from the most well-off to the least. And how much of business rate income will the Government be taking away from local councils to keep for itself?" said Hilary Benn, Labour’s Shadow Communities Secretary.
The proposals apply to the eight Government-identified 'core cities', Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield.
Power will be devolved from central Government to councils to boost the building of transport, housing and broadband ifnrastructure. Major cities, rather than central Government, should make their own decisions on major transport projects which should avoid delay to projects, said Clegg.
Regeneration funding and responsibility is proposed to be transferred from the Homes and Communities Agency to cities. It is hoped that this would give cities the control to prioritise projects that would make the biggest difference.
A £100 million capital investment pot has also been set up for broadband infrastructure projects. In addition to the four national capitals, up to six cities could benefit from this new investment and the Government is inviting proposals on faster broadband projects, city-wide high speed wireless connectivity and information and demand-building activities.
"The government has set cities a challenge - to use their new powers to drive economic growth outside London and the South East," said Neil Lee, senior economist at the Work Foundation, according to the Guardian. "Now cities need to rise to this. It will not be an easy task, however, with growth for next year predicted to be 0.7 per cent, cities face a difficult economic climate in which to prove their worth."
