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Budget16: Chancellor fires up Midlands Engine with cash for growth

Budget16: Chancellor fires up Midlands Engine with cash for growth

🕔17.Mar 2016

Metro mayors and combined authorities turned out to be big winners from George Osborne’s budget, with the Chancellor delivering a significant financial boost for devolution.

City regions where devo deals have already been approved, like Greater Birmingham, will receive single pots of funding to spend on local priorities, worth £2.86 billion in total.

The single pots will initially include a five-year settlement rolling together existing transport funding, investment funds and Local Growth Fund allocations. This will be supplemented in the future with further flexibility over central government funding.

The Bus Service Operators Grant will also be devolved to areas that adopt bus franchising, and the Adult Education Budget will be included in the single pot from 2018-19 for those areas with devolved adult skills arrangements.

Mr Osborne said the new arrangements would allow devolved regions to take more control over strategic investment through “local decision making”.

The ‘single pot’ announcement for mayoral devolution was welcomed by the Local Government Association which said the scheme would allow councils to bring together previously fragmented funding streams to boost jobs and growth in their area.

However, the LGA urged the Government to go further by making devolved single pot funding available to all councils, regardless of their governance arrangements.

The Chancellor also announced two new rounds of funding deals for local enterprise partnerships.

The country’s 39 LEPs, business-led bodies working with councils to deliver economic regeneration, already control over £12 billion of central government funding.

The initial two rounds of Growth Deals gave local areas nearly £8 billion to drive growth through investing in new infrastructure. Mr Osborne said the new measures would include up to £1.8 billion to be allocated through a further round of Growth Deals with LEPs later this year.

In addition, a further £2 billion of the Local Growth Fund is being allocated through the Home Building Fund providing finance to developers to unlock large housing sites and bring forward the infrastructure that large house building projects require.

Mr Osborne announced a series of measures to kick-start the Midland version of the Northern Powerhouse – the Midlands Engine.

These included the creation of an Enterprise Zone in Brierley Hill and the investment of £14 million in STEAMhouse, a creative innovation centre in Birmingham bringing together arts and culture with science, technology, engineering and maths to drive innovation.

The Chancellor announced the extension of additional work coaches in Birmingham for the next financial year.  They will support businesses to match individuals with apprenticeships, training opportunities and skilled jobs.

Additionally, £2 million has been allocated to develop a regeneration masterplan for Birmingham’s Snow Hill district.  There is also support for Greater Birmingham and Solihull LEP to develop a proposal for a new Knowledge Quarter in the area, around the Curzon Street HS2 station.

Birmingham Children’s Hospital will receive £700,000 from banking fines to complete the fundraising to transform the hopsital’s eye department and create the UK’s first centre for children with rare diseases and undiagnosed medical conditions.

Midlands Connect, a strategic transport body bringing together councils from across the west and east Midlands, will be on a statutory footing by the end of 2018 to create a sub-national transport body for the Midlands.

Priority road schemes have also been identified with a number of initiatives including the upgrading of the M42 and M5 around Birmingham to a four lane smart motorway.

The Government has agreed with LEPs in the Midlands and the British Business Bank to create a Midlands Engine Investment Fund of over £250 million to invest in smaller businesses in the Midlands

Councillor Bob Sleigh, chair of the shadow West Midlands Combined Authority, said:

We welcome the investment in the West Midlands and the Chancellor’s acknowledgement that the Midlands Engine is starting to get real traction.

As a combined authority our priorities around economic growth, job creation, skills and better and quicker transport are reflected in the budget and we look forward to delivering on these important infrastructure projects and developments.

In other Budget announcements it was confirmed that the Midlands, Greater Manchester and East Cheshire, Sheffield City Region and Lancashire LEP will each benefit from a science and innovation audit. These will help each of these regions to map their research and innovation strengths and to identify areas of potential global competitive advantage.

The Chancellor indicated that the Government is actively pursuing a plan to use the multi-billion pound assets from local government pension funds to deliver new housing and jobs – a proposal first put forward two years ago by John Clancy, who is now the leader of Birmingham city council.

Mr Osborne said:

The Government has received ambitious proposals from local government pension scheme administering authorities to establish a small number of British Wealth Funds across the country by combining their assets into much larger investment pools.

These pools will deliver annual savings of at least £200-300 million, and we will work with administering authorities to establish a new Local Government Pension Scheme infrastructure investment platform, in line with their proposals, to boost infrastructure investment.

The government will pilot the approach to 100% business rates retention in Greater Manchester and Liverpool City Region and will increase the share of business rates retained in London.

This will help to develop the mechanisms that will be needed to manage risk and reward under 100% rates retention and will help authorities to build financial capacity to reform core services and invest in long term economic growth from 2017 – three years ahead of schedule. The offer is open to any area that has ratified its devolution deal.

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