Loans for big city transport schemes back on the agenda

Sep 24 2010 By Jonathan Walker

More than £500 million could be raised to pay for a series of ambitious transport schemes in the West Midlands after Deputy Prime Minister Nick Clegg announced radical reforms to rules on council borrowing.

Projects lined up include a new public transport service between Birmingham Airport and the city centre, a new railway station in Wolverhampton and the long-awaited extension of the Midland Metro to Brierley Hill in the Black Country.

But residents in the West Midlands may be reticent to believe the proposals as the Birmingham Post reported near-identical aspirations two years ago when the seven metropolitan councils called for similar Accelerated Development Zones which never came to fruition.

It follows Mr Clegg’s announcement at the Liberal Democrat conference in Liverpool that councils will be free to borrow cash to pay for major infrastructure projects designed to boost the local economy.

Loans will be repaid from the increase in business rates councils can expect to receive once the infrastructure is in place.

The scheme, known as Tax Increment Financing, will be one of a range of policies included in a new policy paper setting out measures to improve the economy in the English regions outside London and the south east.

Authorities in the West Midlands have been calling for the policy for many years and Birmingham City Council’s deputy leader Paul Tilsley (Lib Dem Sheldon) said he had been lobbying Lib Dem ministers in government, including Mr Clegg and Danny Alexander, the Chief Secretary to the Treasury, to introduce the measure.

A range of projects are already lined up to take advantage of the scheme, although the Government has not yet announced when it will be up and running.

They include a £425 million rapid transit system between Birmingham city centre and the airport, of which £295 million will be funded by Tax Increment Financing borrowing. Details of the system have not been decided but it could involve a new light rail scheme.

More than £173 million could be borrowed to fund the £292 million Wednesbury to Brierley Hill Rapid Metro extension.

Councils also want to raise £19 million to help pay for Wolverhampton Interchange Railway Station, £19 million for transport improvements at Longbridge, Birmingham, and £29.4 million towards the i54 business park on the outskirts of Wolverhampton.

But Coun Tilsley said the new freedoms for local councils to raise funding could allow Birmingham to pursue a range of other projects, such as introducing high speed broadband in the city.

He said: “I was extremely pleased with the announcement. It is something I have been working on for a long time.

“It could be that when we look at our transport infrastructure, it would give us the opportunity to improve that. It could let us make up in any shortfall in funding for the Metro extension.

“It could give us the opportunity of investing in super broadband, which would give us a competitive edge on other cities in the UK.”

Announcing the policy in Liverpool, Mr Clegg said: “It is the first step to breathing life back into our greatest cities.”