Conservative Summary

Chris Murray, Director of the Core Cities Group, today presented their proposals for the financing of city improvement schemes and outlined the responses of the major parties to the proposals.

He was speaking at a Conservative Party conference fringe event entitled “Financing the future of cities: Who pays?” held by the Core Cities Group within the Urban Hub. Also speaking at the event were Simon Halbot, Director of Development at Westfield; Bridget Blow, president of the Birmingham Chamber of Commerce; and Clive Dutton, Director of Planning and Regeneration, Birmingham City Council. The meeting was chaired by Chris Murray.

Speaking first Chris Murray noted that Core Cities had been around now for 10 years but there was still work to be done to highlight the economic importance of the Core Cities and their regions outside of London. The Core Cities and their regions actually represented over 25 per cent of the English economy which was greater than the economic contribution of London. However, the purpose of this meeting was to outline new innovative mechanisms to overcome the problems of funding development in these cities. In particular, Mr Murray mentioned the need for transformational infrastructure programmes and funding for decontamination of land to allow rebuilding.

Joint Core Cities/PwC research has found that more flexibility is needed in the system. Chris Murray went on to summarize the current financial tools currently in place. Although they were useful pieces in the jigsaw, they were unlikely to raise enough capital in taking forward major infrastructure projects. Supplementary business rates/CIL would not provide enough funds for major transformational projects, LABGI was now too small and business investment districts were not appropriate in areas with no current business.

Local Authorities were taking advantage of prudential borrowing, but more was needed. He then moved onto the new research being launched at the party conferences. Mr Murray detailed the Regional Infrastructure Fund which is now being used by the South West RDA, which makes funds for infrastructure available up front. Mr Murray also called for a model on tax increment finance and the creation of Accelerated Development Zones. Integrating these schemes in with existing financial tools meant that major regeneration zones could benefit from an adidtional 50-80 per cent growth in the economy where this kind of investment took place. Existing schemes also tended to be short-term, Mr Murray stated, concluding by calling for pilots to be run which allowed long term access to revenue to finance borrowing.

In response, Bridget Blow, president of the Birmingham Chamber of Commerce, said she welcomed Core Cities’ ideas and that other Chambers of Commerce were supportive. She said that if finance was provided up front from increased business rates, it could be earmarked for infrastructure and the business community could have its say. She described city region partnerships which had businesses on their board. She also described how this wouldn not necessarily create another business tax; the extra money collected as business rates due to growth would be diverted from the treasury back to the local level.

Clive Dutton, Director of Planning and Regeneration at Birmingham City Council, presented the local authority perspective on the issue. City regions, he said, needed to boost investment in infrastructure because they were no longer competitive enough. He described tax increment finance and Accelerated Development Zones as potent tools to achieve this. Birmingham had learnt important lessons from Chicago, in particular that a 20-30 year long term strategy needed to be in place.

Speaking last was Simon Halbot, Director of Development at Westfield. He called for more imagination and supported this by citing their midland metro expansion project into which they had invested £36 million. Projects like these created a significant uplift in the rateable value of the properties in the area and this extra income should be used to support the up front borrowing, he argued.

In the subsequent question and answer session a question was asked on the legislation required to make these proposals a reality. Chris Murray, from Core Cities, responded that currently there was a bill before Parliament to allow supplementary business rates but he did not think it would be possible to add the other provisions to that bill in time. Simon Halbot, from Westfield, described that currently it would not be possible to raise business rates. Instead he wanted more tax incentives to encourage retail development because currently that was not taking place outside the South East.

In response to a question on the details of supplementary business rates, Chris Murray stated that they were actually not in favour of supplementary taxes but merely wanted to retain locally the tax currently being collected. Ms Blow reassured that the rates would be specifically raised for a specific project that was needed.

In a final question on the response of the major parties to the proposals, Mr Murray said that the Liberal Democrats had been very supportive. He had spoken with Eric Pickles, the Shadow Secretary for Communities and Local Government, and Oliver Letwin, Chair of the Conservative Party's Policy Review, and they had asserted they would like to see the changes happen. Whilst Labour stressed that they would look at the detail, they would first like to ensure cross party support due to the long term nature of the proposals and wanted assurances that the schemes would be used.