Responding to the Sub-National Review of Economic Development and Regeneration, announced this afternoon, Dermot Finch, Director of the Centre for Cities, said:

"With Regional Assemblies due to be phased-out from 2010, local authorities will have a new opportunity to fill a gap in accountability and hold Regional Development Agencies to account. Council leaders and local politicians now need to make the most of their new powers.

"Supplementary business rates will be a valuable tool for local city leaders, and an important stepping stone towards wider devolution. Cities need more powers to raise their own money for their own transport schemes - their economies depend on it. Our research* shows that the ongoing recovery in many urban areas will be held up without greater financial freedom. For example, a 2p business rate 'top-up' in Birmingham City alone would eliminate the funding gap for the New Street Station redevelopment. Another 2p ‘top-up’ across Greater Manchester would come close to covering the local share of Metrolink Phase III.”

Notes to Editors

The Centre for Cities is an independent urban research unit, currently based at ippr. It focuses on the economic drivers behind urban growth and change. Later this year, the Centre will spin out from ippr and set up on its own.

The Centre for Cities proposed the introduction of Supplementary Business Rates last year in its report on City Leadership. The proposal was taken up by Sir Michael Lyons in his review of local government. Together with PWC, the Centre for Cities will shortly be releasing a paper containing new figures on what a 2p and a 4p supplement could raise in 34 English cities and 3 Counties, and how much those cities could levy from 10 year, 20 year and 30 year loans, and what this means for England's cities.

* Data from Connecting Cities by Adam Marshall and Ben Harrison, Centre for Cities May 2007.

A supplementary business rate 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 contribute significantly to the funding of the proposed Bus Rapid Transit network – the successor to the cancelled Leeds Supertram.