The City Finance Commission has recently published a report entitled Setting Cities Free with the aim of bringing about a profound shift in the governance of cities, encouraging growth, rationalising public sector spend, building a new relationship between businesses and local government and enhancing services to the community. The panel was chaired by property developer Sir Stuart Lipton and consisted of local government experts enlisted by Birmingham, Manchester and Westminster city councils.

Over the past 60 years, local control over local services has gradually eroded as power has been centralised in the hands of local governments. Currently, local authorities collect £21.6 billion worth of rates, which is sent to central Government and redistributed around the country. The report has concluded that 75 per cent of cities' funding is spent on social protection, while just 25 per cent is spent on the issues that matter the most to businesses, such as clean streets, business regulation, community safety and infrastructure support. The focus of the report is to encourage the Government to break out of its control zone and trust local cities.

The report says that Whitehall budgets should be devolved to local cities to create a single "Area Growth Budget." Local authorities will be given the key role in commissioning local services such as health, housing, employment and adult education. The idea is that this "single pot" could deliver better, more responsive integrated local services.

The report further recommends that the government establishes a Joint Committee with representation from the public, private and voluntary sectors to examine the future relationship between local authorities and businesses.

It is hoped that this reorganisation will achieve economic growth in major cities, lower rates of unemployment and higher levels of productivity, better connections to local policies for local businesses and clear and visible local accountability through the "Area Growth Budgets."