New Centre for Cities poll shows thirst for city revenue raising powers in fiscal crunch

Date: 06/12/2010

A new survey by the Centre for Cities has revealed the size of the appetite for devolved financial powers in UK cities.

Three-quarters (76%) of the senior economic development professionals across England’s major cities and towns polled during October and November agreed that relocalising the business rate would be positive for their local area. Even more were positive about Tax Increment Financing (TIF), with 90% of respondents rating this as ‘good’ or ‘very good’ for their city’s economy.

However, despite recognising the progress on many aspects of devolution made by the Coalition, cities were more lukewarm about the potential for Local Enterprise Partnerships and the Regional Growth Fund to drive their future economic growth.

And while many were keen on new financial powers for cities, over four in ten (40.5%) felt the government had made ‘no progress’ on devolving funding to local government. More than a quarter (26%) thought that, despite recent policy announcements, government had made ‘no progress’ on devolving powers or responsibilities to local government.

Key findings – financial powers

• Respondents had high hopes for new revenue streams and novel financing methods. Nine in ten (90%) think their city would benefit from the introduction of TIF, and over three-quarters (76%) think their city would benefit from the relocalisation of business rate revenues.

• Respondents acknowledged progress from the Government on devolution (over 90% said they had seen progress on Local Enterprise Partnerships and on the wider localism agenda), but perceive there are still substantial constraints on their ability to exercise powers at a local level. One in five (20%) said they had no opportunity at present to exercise devolved powers.

Key findings – deficit reduction

• Nearly all city respondents (96%) viewed the Spending Review as an important announcement in determining future economic growth.

• More respondents identified public sector job losses and budget cuts as a big challenge facing their city (more than one in four responses) than any other issue, reflecting concerns raised by local authorities and the LGA recently that council job losses will be higher and sooner than previously estimated

• Growing key sectors such as the knowledge economy was identified most frequently (15% of responses) as one of the main opportunities to improve city economies, followed by supporting firms for private sector growth (14% of responses).

Alexandra Jones, Chief Executive of Centre for Cities said,

"This survey shows just how critical cities think the new financial powers that the Coalition has put on the table – like tax increment financing and proposals to relocalise the business rate – will be for their future economic growth. With local finances under intense pressure, many see these new tools as a way to fill the gap left by public spending cuts.

"However, the reality is that not all cities will be able to benefit from these policies, at least in the short term when they are seeking to manage the impact of budget cuts. For example, tax increment financing is likely to be piloted only in certain areas and may not happen until 2013/14. The Coalition should recognise that TIF isn’t a catch-all solution for every city.

"The onus is also on cities to seize opportunities rather than waiting for guidance from government. The budget cuts will create enormous challenges; cities need to both ensure central government is aware of this, but also to lead the way themselves in taking measures that are right for each city’s local economic circumstances.”

For more information, please contact:

Rosamund Taylor
0207 803 4316 / 07876 175 426
r.taylor@centreforcities.org

Notes to editors:

City Views is an independent survey of senior economic development professionals across the major cities of the UK on their views about the Spending Review, Local Growth White Paper and wider reforms, proposed or planned by the Coalition.

The survey was not designed to be representative but to capture the immediate views from a group of senior specialists. Survey respondents include 57 local authority economic development leads and partners. Respondents were polled between October 27 and November 12, 2010.

The Centre for Cities has examined the implications of the Spending Review and Local Growth White Paper for cities. The Centre also provided a submission, in advance of the Spending Review, outlining priorities for future urban growth.