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21/08/2017

How cities are using assets to negotiate financial uncertainty

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Money / iStock-185267728

With uncertainty around their powers to raise finance from business rates, city leaders are taking imaginative approaches to making money from their assets, says Andrew Carter

Since the general election result there has been much talk of ending austerity, with cabinet ministers diverging from the government line to call for more funding for the NHS and schools.

But amid this speculation there has been no indication that local authorities will benefit from any relaxation of austerity policies. Indeed, local authority funding is even more uncertain following the Queen’s Speech, which made no mention of the Local Government Finance Bill to pave the way for full local retention of business rates by 2020.

It isn’t entirely clear when, or if, business rates devolution will go ahead.

So the onus is on city leaders across the nation to find ways to raise revenues to pay for the public services they provide. A report by the Centre for Cities shows that places across the country have been responding to austerity by getting creative with public assets.

“It isn't entirely clear when, or if, business rates devolution will go ahead"

How City Partnerships Make the Most of Public Assets looks at how cities are using their assets – from buildings and land, to former coal mines and disused fibre optic ducting networks – to increase their revenues as well as kick-start local economic growth.

In Newcastle, the council has teamed up with Newcastle University on a joint venture to refashion a large site they owned on the edge of the city centre – previously both a brewery and a colliery – as the city’s new Science Central urban quarter.

The initiative, which leaders hope will attract more innovative business to the city, had originally been championed by One North East, the regional development agency. But following its abolition in 2010, and the collapse in Newcastle’s commercial development market following the financial crash, Science Central became a strategic way to boost business growth in the city centre, particularly where the market was not willing to take the risk.

While austerity may have provided the imperative for local leaders across the country to adopt this entrepreneurial approach to their assets, the benefits that many places are seeing in terms of increased revenues and economic growth means that local leaders will carry on regardless of the funding context.

Enabling cities to retain a greater share of those business rates revenues generated on the back of growth would encourage leaders to consider how they can use disused land and buildings. This is why it’s vital that the government does not drop its plans for business rates devolution.

Pushing through these reforms will not only be critical in giving cities the certainty they need to plan, it will also give cities more incentives to make better use of valuable assets that might otherwise be overlooked.

Andrew Carter is chief executive of the think tank Centre for Cities

Image credit | iStock

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