A ‘break-through’ deal giving Manchester control of its finances could result in £1.2bn of infrastructure investment in the city, George Osborne said today.
In addition to the £1.2bn, under the City Deal between government and Greater Manchester Combined Authority, the city will create a Greater Manchester Housing Board and devise a joint venture to produce a pipeline of low carbon projects. There will also be initiatives to attract investment from China and India.
Mr Osborne said today: “We are working with our great cities to devolve decision making powers – and we are striking a ground-breaking deal with Manchester to support £1.2bn in growth-enhancing infrastructure.
“We will support £150m of TIF to help local authorities promote development. And we will provide an extra £270m to the Growing Places fund.
“In all this we are working with local areas to support their ideas for growing the private sector in parts of the country where the state has taken a larger and larger share of the economy.”
Lord Peter Smith, chair of the GMCA, said: “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.”
Richard Threlfall, head of infrastructure, building and construction at KPMG, said the Manchester deal is likely to be emulated by other major cities.
He said as the Manchester economy grows and generates additional taxes, a proportion of these taxes can be used on local Manchester transport projects.
“The city will reclaim £30m a year from the Treasury and reinvest it in further infrastructure development, which could include new roads or light rail extensions. Manchester is the first city to secure such a deal and we can confidently predict the UK’s other major cities rapidly forming a queue at the Treasury’s door.”
‘City Deal’ between Manchester and government
Earnback Model - Up to £1.2bn invested up front in infrastructure improvements by GMCA will be ‘paid back’ to the combined authority as it sees ‘real economic growth’. This is the first TIF-style scheme in England outside London.
These ‘earned back’ funds will be reinvested in further infrastructure improvements. The first phase will include the completion of the Greater Manchester Transport Fund programme, enabling the early implementation of schemes including the South East Manchester Multi Modal Strategy (SEMMMS) and the extension of Metrolink to Trafford Park.
Investment framework - a framework to align funding and assets to prioritise economic growth in the region and cut red tape. Already used in the Greater Manchester Transport Fund, it prioritises projects for investment based on their economic impact.
There are also plans to establish a Greater Manchester Housing Investment Board with government and the Homes and Communities Agency to use national funding, local investment and public land assets to boost housing development.
Growth hub - already in place to support local businesses through access to advice and resources. A three-year transitional funding package will enable GMGA to expand the service to deliver targeted programmes, improve access to finance and strengthen business-to-business mentoring. Greater Manchester will then use Enterprise Zone revenues from 2015 onwards to ensure the hub is on a sustainable footing.
Skills and the local economy - The authority will deliver 6,000 apprenticeships via SMEs and pilot new incentives for businesses to invest in training.
Low Carbon Demonstrator - GMCA and UK Green Investments will fund a 50/50 Joint Venture to create a strong pipeline of investable low carbon projects, potentially levering in significant extra funding for Greater Manchester projects.
Inward Investment Beacon - Government will work with Greater Manchester to develop the city’s role as a “beacon for high value inward investment” from China and India in a unique partnership with London. Greater Manchester will match funding from central government to work in those markets to generate new jobs in the UK.