MPs tell ministers to push ADZs

Members of the all-party Urban Development Group said the government should pilot five or six models of the US-inspired infrastructure building models with a view to setting up a national scheme by 2011.

Accelerated Development Zones (ADZs) would allow councils to use the projected business rate income generated by infrastructure projects such as transport improvements in order to borrow cash to fund those improvements in the first place.

The method, known as Tax Increment Financing in the United States, is especially suited to work that has recognised advantages but cannot be funded by purely commercial means.

The Birmingham City Region is currently working on proposals for a £1bn ADZ that would include up to 15 different projects across Birmingham, the Black Country, and Coventry.

Lambeth LBC and Wandsworth LBC, meanwhile, are investigating the role of an ADZ in financing the regeneration of Battersea Power Station and an extension to London Underground’s Northern Line.

Clive Betts, Sheffield MP and chair of the all party group, said piloting ADZ schemes was one way to avoid the current recession from putting the brakes on regeneration.

He said: “Piloting new funding models like TIF could open up many doors to new financing that simply would not be available otherwise. 

“And the pre-Budget report is the place to do it.

“It is essential that councils take a more realistic view of what makes development projects viable and that risks – and ultimately rewards – will have to be shared out more.”

Mr Betts said he expected regeneration projects over the next decade to be “very different” from what had gone before - and that greater risk sharing between the public and private sectors, as well as a greater level of master planning, would be necessary.

In May, then Local Government Minister John Healey wrote to councils asking for three-page submissions of regeneration projects that may be suitable for ADZs to be submitted by the end of June for consideration as future pilots.

In parallel, the Core Cities Group is running a feasibility study on the necessary components any future ADZ pilots will need for success.

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