Gordon Brown has pledged funding for London's Crossrail project if businesses provide money as well and the MP has thrown some light on proposed Supplementary Business Rates and their likely effect on Business Improvement Districts.
Gordon Brown said financial services companies in the City financial district would have to make a "significant contribution" but he did not say how much money the government would commit to the £16bn overall cost.
The planned rail link would connect Maidenhead in the west to Essex in the east with a tunnel under central London. As well as adding capacity to London's overcrowded tube network, it would link the capital with its airports. But it could also have implications for the future of Business Improvement Districts (BIDs) if it establishes the precedent for a supplementary business rate (SBR) to adopted nationally (see earlier story in knowledgebase)
The Chancellor said; - "No government has previously managed to bring the necessary finance together, in the last few months we have worked night and day to achieve this,"
The private sector's contribution would be achieved through a levy on businesses that would benefit from the project but it is still unclear how much businesses would have to pay (although 3% of rateable value is being mooted) and whether this tax would be levied on large businesses or all businesses. The City of London has pledged £300m but this is a voluntary contribution.
Meanwhile Angela Eagle MP - exchequer secretary to the Treasury - revealed current thinking about SBR at a fringe meeting at the Labour Party Conference in Bournemouth. The Treasury is prepared to endorse a national system if a mechanism can be found to prevent local authorities from using the supplementary rate to reduce council tax charges.
Angela Eagle made it clear that the Treasury sees the tax as a resource to be used solely for improving local infrastructure not for plugging gaps in local authority budgets.
National Business Groups such as the CBI have come out against the tax as have most of the 40 or so Business Improvement Districts (BIDs) in the UK.
The final go-ahead for the project is expected to come in the next month as the government announces the details of its comprehensive spending review (CSR).
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As a concept SBR would appear to be rising up the political agenda quickly but it remains to be seen how it would sit alongside existing BIDs and it may sound the death knell for any new ones.
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