Loans for big city transport schemes back on the agenda
Sep 24 2010 By Jonathan Walker
The new Government scheme can only be used to pay for infrastructure, such as major buildings. It will also require councils to find a lender, such as a bank, willing to share the risk of the project failing to bring in the expected increase in business taxes.
It will also add to Britain’s debts – at a time when the Government says cutting the budget deficit is a top priority.
Mr Clegg said: “We will put local government back in charge of the money it raises and spends.
“That’s why in our first budget we unlocked more than a billion pounds of ring-fenced grants.
“That’s why we will end central capping of council tax. That’s why we will allow councils to keep some of the extra business rates and council tax they raise when they enable new developments to go ahead.
“And I can announce we will be giving local authorities the freedom to borrow against those extra business rates to help pay for additional new developments.”
He added: “In every city in the UK, what matters most is that finally, they will be in the driving seat, instead of waiting for a handout from Whitehall. Local people, local power, local change.”
Councillor Mike Whitby, Chair of the City Region Board and Leader of Birmingham City Council, said: “City Region council and business leaders have been at the forefront of a national campaign to persuade Government to allow us to use tax increment financing to boost competitiveness and jobs.”
He added: “Working with partners in southern Staffordshire and north Worcestershire we have five ready to go major transport investment projects which if supported by £536 million of TIF funding would create over 20,000 new jobs.’’
Councillor Neville Patten, leader of Wolverhampton City Council which is directly involved in two of the five schemes added: “Our fully costed and detailed calculations show that tax increment financed borrowing of £38 million would support the development of Wolverhampton railway station and the i54 site creating up to 7,700 new jobs.”