Election '97: Devolutionary talk as Second City seeks say in financial future

Birmingham celebrated the Sixties at the weekend with a series of special tours of its modern architectural heritage - and the event was not without a certain irony. For the celebration came less than two weeks after developers got the go-ahead for a major refurbishment of the city's infamous centrepiece - the 1960s Bull Ring - aimed at breathing new life into Birmingham's commercial heart.

The pounds 300m Bull Ring project is one of several developments, mostly privately funded, that will pump about pounds 1bn into the city during the next few years. Local businessmen and politicians are confident that the investment, along with a steady flow of big conventions like the 1998 G7 summit, will see Birmingham through the next recession with less pain than could otherwise have been expected.

Birmingham has done better than the country's other big conurbations in creating jobs in the face of declining traditional industries, according to the Business Strategies consultancy. But in a city where unemployment is twice the national average, and six wards have a rate three times the average, there is no complacency about economic prospects. There is, even so, a sense that if Labour wins the election it will bring the first chance for two decades for Birmingham to grab back from central government more say over its own future.

Discussion within the party about the merits of elected mayors have excited hopes that there is a real prospect of the devolution of powers under a Labour government, even though Tony Blair has said only that he is minded to create such a post in London.

In fact, Birmingham's chief executive, Michael Lyons, and council leader, Theresa Stewart, a Labour stalwart, are opposed to the notion of an elected mayor. "It gives you Action Man government," says Mr Lyons, who argues that modern cities are too diverse and full of conflicts for a strong, chairman-of-the-board model of leadership to work. Indeed, he is cautious about what a Labour government would deliver at all. "Labour has historically been a very centralist party, and it would not be in a position to release us from tight financial controls," he says.

But like a wide range of civic leaders in Birmingham, he is a strong advocate of seeing more financial decisions made by the city for the city. Two areas crop up repeatedly: the city's physical infrastructure and planning.

Tony Bradley, director of policy at the Birmingham Chamber of Commerce, says: "We could form a tremendously successful city region." But one obstacle is the lack of investment in infrastructure, especially transport. This is not a finance problem. Private funds are available, although the introduction of the private finance initiative did slow some projects down. It is a decision-making problem. "Transport projects need more local decisions. The time-scale is 15 or 20 years, and you have to get them through three or four terms of office of central government," says Mr Bradley.

Birmingham is waiting for the new government to give its verdict on the northern relief road, intended to reduce congestion on the M6. The decision, due in November, has been delayed by the general election. So has a verdict on the plan for a huge Korean inward investment project on a greenfield council site at Peddimore, strongly opposed by Sir Norman Fowler, the Tory MP for Sutton Coldfield.

The second aspect of the desire for more local power also arises from frustration with the slow pace of Whitehall decisions. Businessman and city councillor John Hemming, the Liberal Democrat candidate for Birmingham Yardley, says: "The only way you could do anything sensible is through local pilot schemes. Whitehall is very good at making big mistakes. It has to be willing to allow cities to experiment." On his wish list for the next government, Mr Lyons puts freedom from unnecessary central restrictions, better co-ordination between central government departments and, above all, the ability to raise more revenue locally.

"Less than 15 per cent of tax is being raised locally, which is untenable in terms of democracy," he says.

He gives the example of Birmingham's National Exhibition Centre and Convention Centre. The former makes a profit and both will be profitable by 2004, but the council is still paying a pounds 15m subsidy this year.

"Councils do need an ability to underwrite this sort of project. You have to be able to raise some money locally," he argues.