Birmingham has been offered control over rail and bus services, job centres and further education – if the public decides it wants an elected mayor.
The Government is offering the city the chance to grab power and money from Whitehall, if voters choose to introduce a directly-elected mayor in a referendum next year.
But although Ministers are “not ruling out” devolving power even if voters reject proposals for a mayor, the chances of the city grabbing real authority for itself will be reduced.
Nick Clegg, the Deputy Prime Minister, is leading plans for what he calls “an unprecedented transfer of power” from central government to the major cities.
Ministers are currently in negotiations with councillors in England’s eight “core cities” of Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield, to discuss what type of authority could be given up by Whitehall.
A document drawn up by the Department for Communities and Local Government and distributed to council leaders sets out some of the possibilities, including giving cities responsibility for handing out franchises to rail companies to run local services.
Other proposals include taking over responsibility for commissioning bus services, improving skills, supporting industry and taking over the employment service, Job Centre Plus.
The aim of the document is to encourage cities to be ambitious, and ministers insist they are open to almost any suggestion.
But speaking to the Birmingham Post, Cities Minister Greg Clark said the Government would be more willing to hand over power if cities chose to elect a mayor.
He said: “We are determined to decentralise powers but clearly one of the reasons for having discussions with each of the cities is that their capacity to take on some of these powers and services will vary from place to place.
“It is clearly the case that where you have strong leadership and a clear mandate for that leadership, that is a great advantage.
“We are not ruling out other arrangements being considered.
“But it is clear that the government has always thought that having a directly elected mayor provides that kind of visible leadership that is necessary to be able to conclude these deals.”
He confirmed this week that the referendum on whether to replace the existing local government system, in which voters elect councillors who in turn appoint a council leader, would be held on May 3 next year.