Britain’s transport problems will not improve unless the Government loosens its grip on the finances available to cities and towns, an all-party group of MPs claims.
Redevelopment schemes, like the proposed Birmingham Gateway, are being put on hold because city councils are denied the ability to raise the funding for essential transport infrastructure.
The All Party Urban Development Group’s (APUDG) inquiry into infrastructure provision in the UK concludes that an excessively centralised system of finance is stifling new investment in Britain’s transport infrastructure.
The report, Loosening the Leash, says that Britain’s infrastructure crisis is partly due to Whitehall micro-management, excessive bureaucracy, too many funding streams, and financial rules that constrain local government’s ability to help fund their own infrastructure.
The group calls on the forthcoming Lyons Inquiry and Comprehensive Spending Review to devolve funding and financial powers to Britain’s cities and towns – which need financial freedom from Whitehall to deliver better transport.
The report recommends two new local financial powers that would increase local investment in vital infrastructure:
• Tax Increment Financing – already used in the United States and Australia – would allow local authorities to build infrastructure ahead of new development.
• Supplementary Business Rates, with business support, could be used to ring-fence money for transport improvements.
The report also warns that the proposed Planning Gain Supplement (PGS), due to be introduced in 2009, could result in further centralisation, bureaucracy, and infrastructure delay. The Government has promoted PGS – a tax levied on the increase in land values that arise when land is granted planning permission – as a solution to infrastructure funding needs. But the APUDG is concerned that some of the proposed tax will be taken and redistributed by the Treasury – and that it will not provide the up-front infrastructure funding that our cities and towns need. Government must urgently clarify PGS, before rushing into implementation.
“Britain’s cities are being held back by our centralised funding system, said group chair Clive Betts. “Government needs to empower city leaders to take more of their own decisions. Today’s report recommends some new local financial powers, for cities to fund more of their own transport systems. Our message is clear: greater devolution is essential for the future success of our cities.”
