How to… finance inclusive growth in cities

Nottingham’s Workplace Parking Levy helps fund better public transport in the city

Every UK city should set up its own commission to develop and finance inclusive growth polices, according to a report by the Centre for Cities, supported by the Joseph Rowntree Foundation.

Called Funding and Financing Inclusive Growth in Cities, it suggests a number of ways in which councils and local partners can unlock investment to increase inclusive growth.

An inclusive growth investment commission in each city could help identify priorities in their areas, raise finances and coordinate efforts.

The report recommends that local authorities raise revenue to fund inclusive growth projects through taxing workplace parking. While UK cities have very limited tax-raising powers, they can generate revenue by introducing fees on road transport.

A workplace parking levy (WPL) would enable cities to generate funding for public transport, connecting people to jobs and opportunities, as well as tackling congestion and pollution.

It cites the example of Nottingham Council, which generates £9m a year through a WPL and uses the money to fund public transport improvements in the city.

The report calls on councils to help local businesses by providing responsible finance providers with grant funding to catalyse further investment, and capital lending to secure a return on investment.

Birmingham Council, for example, has helped ART Business Loans – a local not-for-profit lender helping firms in marginalised communities – to expand their lending activities, by providing investment to cover ‘first losses’.

It also recommends the use of local asset backed vehicles (LABVs), which are partnerships between local authorities and the private sector to drive regeneration projects.

In Sunderland, for example, the council delivered a £100m regeneration project through a LABV in partnership with Carillion Developments and Igloo Regeneration, as part of wider strategy to attract jobs to the city.

Finally, the report recommends councils set up a city fund to to convene investors, manage funds and invest in projects for specific aims such as increasing inclusivity of growth.

Bristol mayor Marvin Rees formed a city fund with Bristol and Bath Regional Capital and other partners, to direct local investment into areas such as housing and employment as part of the council’s inclusive growth strategy.

‘Concerns about poverty and exclusion are among the key political issues of our age,’ said Centre for Cities chief executive, Andrew Carter.

‘But local authorities do not have the finance or scope to tackle these issues alone, and nor should they be expected to. Instead, city leaders should bring together public, private and community actors to collaborate on efforts to extend growth and prosperity to more people across their areas.

‘Setting up an inclusive growth investment commission would offer city leaders and local partners a platform to make the most of existing funding and assets, and to find new ways to raise finance and long-term investment,’ added Mr Carter.

‘This could take different forms in different places, but the crucial point is that a concerted approach to tackle these issues is needed in all cities.’

• Read the full report here.