Cities need greater financial freedom to improve transport

Date: 21/05/2007

England’s cities need new fund-raising powers in order to pursue much needed local transport improvements, according to a new report published today (Monday) by the Centre for Cities at ippr.

Connecting Cities says that introducing a supplementary business rate – endorsed by Sir Michael Lyons’ recent review of local government – will help cities deliver key local transport schemes. For example:

• Birmingham: A 2p business rate ‘top up’ in Birmingham City alone would yield £15.4m per year – which would support a ten-year loan of around £118m. This would eliminate the funding gap for the New Street Station redevelopment – which currently stands at £114m.
• Manchester: A 2p business rate ‘top up’ across Greater Manchester (10 authorities) would yield £40.6m per year – and support a ten-year loan of around £310m. This comes close to covering the local share of Metrolink Phase III (£380m – on top of £520 from DfT).
• Leeds: A 2p business rate ‘top up’ in the Leeds City Council area would fund nearly 40 per cent of the cost of the proposed Bus Rapid Transit network – the successor to the cancelled Leeds Supertram.

The report calls on the Government to use the forthcoming Road Transport Bill and the Comprehensive Spending Review to give England’s regional cities the financial freedom to deliver better transport – or risk undermining their on-going economic recovery.

Dermot Finch, Director of the Centre for Cities said:

“England’s cities need more financial freedom to deliver local transport improvements. Their future economic growth depends on it.

“City leaders, businesses and ministers must reach agreement on supplementary business rates, as proposed by the Lyons Report. These will give cities a key tool to invest in transport and support local economic growth.”

An Executive Summary of Connecting Cities: local transport, national connectivity and economic growth, by Adam Marshall with Ben Harrison, is available to download here

Notes to editors

1. Connecting Cities – part of the Centre for Cities’ ongoing transport work – brings together the views of over 100 key local stakeholders, collected during a series of seminars held between October 2006 and February 2007 in Newcastle, Birmingham, Liverpool, Bristol and Reading.
2. Issues covered by the seminars included: governance and finance of local transport; the future of local bus services; prospects for local road-user charging; inter-city rail links; the economic role of ‘gateways’ – airports and ports.
3. The launch of Connecting Cities will be held on 23rd May 2007. Key speakers include John Healey MP (Financial Secretary to the Treasury), Paul Coen (Chief Executive, Local Government Association) and Professor Stephen Glaister (Imperial College).
4. The Centre for Cities’ City Leadership report (Feb 2006) first recommended the use of supplementary or ‘top-up’ business rates to fund transport priorities in big urban areas. It found that a 2p ‘top-up’ in Greater Manchester or Greater Birmingham would yield at least £35m a year for local transport improvements.
5. Evidence collected from regional cities across England suggests that Government should:

• Devolve substantial financial power, including new revenue-raising powers, from the centre to city-regions and sub-regions
• Introduce legislation for strategic local transport authorities, able to take decisions and finance transport improvements across city-regions
• Re-focus stalled debates on road-user charging, focusing on how cities can make local road-charging schemes work
• Enable local transport authorities to work more closely with private-sector funders - including infrastrucutre funds - to deliver transport improvements.

The Centre for Cities is an independent research unit, taking a fresh look at how UK cities work. It is currently based at the Institute for Public Policy Research (ippr), and is due to spin out from ippr in late 2007.

Later in 2007, the Centre for Cities’ City Transport workstream will publish a range of new research outputs, including path-breaking work on the economics of transport investment in the Leeds city-region, and critical analysis of a range of key transport governance and finance issues.