The Government’s proposals for plugging the funding gap for vital local infrastructure projects will fail to raise the necessary investment, according to MPs, including former local government minister, Nick Raynsford.
The proposed planning gain supplement is ‘unlikely to generate the amount of money needed to address infrastructure needs,’ according to the all-party urban development group of MPs, who urged greater ambition, given the size of the transport problems facing cities.
Other options are either unlikely to work more widely – such as Milton Keynes’s ‘roof tax,’ designed for large-scale developments – or, as with multi-area agreements for pooling Whitehall cash, have yet to win approval, the MPs found.
More radical options need to be considered which will allow the widespread raising of funding for upfront delivery of infrastructure possible. Ring-fencing supplementary business rates or allowing councils to borrow against future revenue streams – ‘tax increment financing’ in the US – are the ‘best options’.
But the MPs and peers from the three major parties acknowledge that these would require the time-consuming structural reform to local government or for legislation to be drafted taken through parliament.
In the meantime, the chancellor could streamline the existing plethora of funding streams, to increase flexibility to divert funding for local priorities. Until then, Birmingham council has no way of plugging a £140M funding gap following Department for Transport approval, and Croydon, no means of generating funds for a £60M tram extension.