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Manchester to be first city to earn back own national tax revenues under Government deal

Manchester is set to become the first city to be handed the freedom to reinvest its own national tax revenues under the Government's latest proposed ‘City Deal’.

The plans agreed with ministers would see:

  • The creation of a 'revolving Infrastructure Fund'. This will allow Greater Manchester to 'earn back' a portion of the tax it generates by investing £1.2bn in infrastructure, on a payment-by-results basis. The Government estimates that up to £30m could be earned back in this way;
  • The establishment of a Greater Manchester Investment Framework. This will be designed to make the best use of funding from central government, European funding, and private sector funding to drive economic growth. “Investment will be prioritised on the basis of Gross Value Added and jobs per pound of public funding,” the Department for Communities and Local Government said;
  • The creation of a City Apprenticeship and Skills Hub to increase the number of apprenticeships for 16-24 year olds by 10%. Funding will be channelled direct to employers, in particular small and medium sized businesses;
  • Strengthening of Greater Manchester's Business Growth Hub which gives trade, investment and business advice to local companies. The Government is to contribute £4.4m of transitional funding, prior to local funding from Enterprise Zone revenues becoming available from 2015;
  • Development of the city's role as a beacon for high value inward investment. Markets in China, India and Graphene technologies in particular are to be developed;
  • The establishment of a Low Carbon Hub to integrate multiple carbon reduction measures. The aim is for Greater Manchester to achieve a 48% carbon reduction target by 2020;
  • The establishment of the Greater Manchester Housing Investment Board to set up an investment fund, “to drive the building of 5,000-7,000 new homes by 2017”.
  • A commitment by the Government and Greater Manchester to work together “to deliver improved transport services by devolving the Northern franchises, bus improvement, including the devolution of central subsidies and smart ticketing”.

It has been claimed that the arrangements will lead to the creation of 3,800 new jobs and protect 2,300 existing jobs.

Last month councillors in Liverpool voted to introduce a directly-elected mayor after striking its own ‘City Deal’ with the Government. These plans include the creation of a single investment pot of public and private funds, as well as the establishment of the first Mayoral Development Corporation outside London.

Deputy Prime Minister Nick Clegg said: "This deal breaks new ground, giving Manchester the freedom to be truly revolutionary - 'earning back' tax for growth it creates.”

Greg Clark, the Cities Minister, said: "We've said to each City 'make us an offer'. Tell us how you can drive growth in ways that have not been tried before, or which harness your city's unique strengths in new ways.

"For our whole nation to prosper our cities must also unlock the potential of all of the citizens within them. I am especially pleased that this 'Deal' includes the truly innovative 'Earn Back' model which allows Manchester to reinvest the benefits of its own entrepreneurship. This is just the kind of ground breaking response that we are keen to encourage."

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