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Push on financial freedoms

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West Midlands councils are close to finalising a bid for unprecedented financial freedoms to boost the Birmingham city region’s economy.

A project team of chief executives led by Birmingham City Council’sStephen Hughes were due to meet to finalise the business case to set up an advanced development zone (ADZ) in which local authorities will be able to retain growth in business rates.

Officers supported by advisers PricewaterhouseCoopers have identified between£936m and£1.1bn of investment over 10 years to pay for transport projects ranging from metro schemes to motorway junction enhancements. The business case will be sent to ministers before the end of the year.

The ADZ is a form of tax increment financing credited with regenerating industrial US cities such as Pittsburgh and Chicago. Authorities could borrow large sums of money to spend on infrastructure by retaining the resulting growth in business rates.

Local government minister John Healey has previously expressed his support for such a scheme (LGC - 22/05/08) .

Mike Whitby (Con), Birmingham’s leader and chair of the city region board, hailed the proposals as “radical and unique”. He added: “The potential power of ADZs is incredible.”

Chris Murray, director of the pro-ADZ Core Cities group, claimed it was essential the government acted now so councils could implement the zones once economic recovery started.

“There are voices in government saying this is the wrong time to be borrowing money or relocalising business rates. But if someone said ‘yes’ to this tomorrow it would be at least two or three years until we saw something on the ground.”

He said provisions to allow an ADZ could be included in the Business Rates Supplement Bill or introduced through Sustainable Communities Act submissions.

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