Video: ‘No favours’ - but Leeds and Sheffield are named ‘core cities’

Deputy Prime Minister Nick Clegg, visiting Leeds, also conferred the “special status” on named Manchester, Liverpool, Newcastle, Nottingham, Bristol and Birmingham.

He said it would give the cities’ councils more freedom from Whitehall to invest in and secure money for major spending projects.

Answering an urgent question on the proposals today, Decentralisation Minister Greg Clark claimed the eight were not being favoured over other cities.

He told the Commons: “The intention is to start a series of negotiations with cities.

“It’s not a definitive announcement of powers that are being invested in one city rather than another.”

He said the plans would boost economic growth with the cities able to focus on creating employment in specific sectors.

He added: “They have the great capacity to create private sector jobs.

“If you consider that our jobs in the future are likely to come from knowledge-intensive industries, cities are ideally placed to be the hosts of those industries.

“Cities where people are in close proximity to each other, can share knowledge, can share insights - they will be the cradles of growth in the future.”

Mr Clark, who was visiting Leeds this afternoon, said the eight had “great potential” to contribute to future growth and were the country’s “economic powerhouses”.

He demanded that in return for the beefed-up powers, councils “provide strong and accountable leadership, improve efficiency and outcomes and be innovative in their approach”.

He believed the plan would put cities “back in charge of their economic destinies”.

“It represents a big shift in the way Whitehall works, with the presumption being powers should be handed down where cities make a convincing case,” said Mr Clark.

“We want to start with the eight cities but the vision we have extends to the whole of urban Britain.”

He claimed ministers were “open to suggestions from other cities” about how Government could devolve further powers.

But shadow local government secretary Hilary Benn feared wealthier parts of the country would be preferred for investment from new businesses, and attacked the Government’s whole economic approach.

He added: “We support strong and innovative local government and it should have the powers it needs to do that job, but no amount of warm words will hide two very uncomfortable facts: the Government is cutting unfairly and its failed economic policy is undermining the growth of our core cities and all local communities.

“What they really need is a change of course.”

Mr Benn said during its 13 years in government Labour poured money into cities, sparking a “dramatic revival”.

He criticised “substantial, front-loaded and unfair” cuts to local government and accused ministers of “balancing the books on the backs of the poor”.

Mr Benn also attacked the coalition for failing to disclose its plans to Parliament first, telling MPs: “It should not have taken an urgent question to bring the Minister to the despatch box.

“Once again a major policy announcement affecting local government... is all over the national and regional media having clearly been pre-briefed yesterday when the House should have been told first today.”

Speaker John Bercow agreed, telling Mr Clark: “One wonders whether perhaps you might have considered making an oral statement in the first instance.”

Tory Stewart Jackson (Peterborough) said the announcement showed that the Government was “serious about civic renaissance”.

Mr Clark replied that the aim was for cities to have “greater ability to invest in the infrastructure which then can unlock growth and lead to financial prosperity”.

Labour’s Nick Raynsford (Greenwich and Woolwich) said if the Government was serious about localism, it should “consider options for devolving all business rate revenue to local government and not allowing a clawback by the Treasury”.

Lib Dem Lorely Burt (Solihull) asked about the extent of savings to be made by “reversing Labour’s Whitehall centralisation”.

Mr Clark said whatever the intentions behind the regional development, they had become “instruments” and “embassies” of Whitehall in the country.

Labour’s Graham Allen, chairman of the Political and Constitutional Reform Select Committee, said he “strongly welcomed” the principle and philosophy behind the announcement.

He asked whether localism could be pushed “much further towards a genuine independence” enjoyed in other western democracies.

Labour’s Ben Bradshaw (Exeter) hit out against the earlier decision to take away Exeter’s unitary status.

Mr Clark said: “I know there’s been extensive debate around that, but that issue was settled. I think there was great opposition in the area around that.

“Rather than changing administrative boundaries which I think could bog down this process, our decision and our choice has been to respect existing administrative boundaries, but transfer powers within that, rather than to waste time by making changes to administrative structures and at the expense of transferring power.”

Labour’s Jon Ashworth (Leicester South) asked why Leicester was not considered a core city.

Mr Clark said rivalry between cities was a “healthy thing”, adding: “I am not going to rule out the inclusion of any cities who can make a good case to take on some of these powers.”

Tory Therese Coffey (Suffolk Coastal) asked what was stopping the transfer of these powers to shire counties.

Mr Clark said it was right to recognise that cities have “particular challenges and particular opportunities”.