Budget 2012: First ‘city deal’ gives Manchester tax back
Author: Mark Smulian, LGC |
Greater Manchester councils will be able to keep a share of the extra national tax revenues generated in the conurbation under the first city deal to be struck by the government.
This is the first time that local government has been allowed to directly take a slice of national taxes.
The deal will see Greater Manchester invest 1.2bn in infrastructure to promote economic growth.
It will be able to ‘earn back’ up to 30m of the extra tax revenues generated from this to reinvest in a revolving infrastructure fund. The money will be returned on a payment by results basis.
The whole deal is estimated to create 3,800 new jobs and protect a further 2,300 existing ones.
The city deal was confirmed in the Budget, published on Wednesday. It had been widely expected that Manchester would not be the only city to have a deal announced, with Leeds and Newcastle thought also to be in the running. However, city deals with the rest of the eight core cities ?will be finalised over the course of 2012?, the Budget documents said.
Launching the Greater Manchester deal on Tuesday, deputy prime minister, Nick Clegg said: ?This deal breaks new ground, giving Manchester the freedom to be truly revolutionary ?’earning back’ tax for growth it creates.?
Cities minister, Greg Clark said ‘earn back’ was ?just the kind of ground breaking response that we are keen to encourage?.
Other aspects of the city deal include devolution to local authorities of the Northern Rail franchise in the conurbation, and a commitment to increase the number of apprenticeships for 16-24 year olds by 10% to 6,000.
Greater Manchester has set up an investment framework, under which government, European and private sector funding will be prioritised on the basis of gross value added and jobs per pound of public funding.
There will also be a low carbon hub supported by the Department for Energy & Climate Change, with a target of a 48% carbon reduction by 2020.
A Greater Manchester Housing Investment Board will drive construction of 5,000-7,000 new homes by 2017.
Lord Peter Smith (Lab), chair of the Greater Manchester Combined Authority and leader of Wigan MBC, said: ?These agreements on the Greater Manchester city deal taken together will have a huge impact. Our innovative new funding model has challenged orthodox thinking and means we can press forward with much-needed investment in transport infrastructure which will play a vital role in helping our economy realise its potential.?
Sir Richard Leese (Lab), vice chair of the Greater Manchester Combined Authority and leader of Manchester City Council, said: ?Greater Manchester has a strong track record of working together towards the greater good and we are confident that this city deal will be a significant step forward in realising our ambitions and the potential of the region.
?This is just the first phase. We are confident that the completion of our community budget pilot later this year will enable us to engage further on what we hope will be a wider reform agenda.?