Rail, tram and bus services in Birmingham and the West Midlands could be in line for a £500 million-plus boost following a ground-breaking agreement between business leaders and councils.
Seven local authorities have commissioned a study into using business rates to deliver a step change in the quality of public transport.
The councils, led by Birmingham, want Government approval to set up an American-style Accelerated Development Zone.
If approved, future rate income from new businesses in the ADZ would go to the councils instead of the Treasury.
The councils would be able to borrow against a guaranteed income stream for 25 years – building a pot of money worth as much as £500 million.
No firm decisions about using the cash have been taken, but ideas are believed to include:
• Paying for a Midland Metro extension from Birmingham Snow Hill to New Street and on to Birmingham Airport and the NEC.
• Completing the Midland Metro Black Country extension.
• Improving local rail and bus services.
• Building bypasses and new roads and improving motorways.
The plan, which has the full backing of the region’s chambers of commerce and the regional development agency, was hatched earlier in the month during a special meeting of the shadow West Midlands City Region Board held at Studley Castle in Warwickshire.
The board’s members include the leaders of Birmingham, Coventry, Solihull, Wolverhampton, Dudley, Walsall and Sandwell councils.
Financial consultants PricewaterhouseCoopers have been asked to prepare an ADZ submission for the Government.
Transportation projects receiving financial backing will be chosen on the basis of locations most likely to unlock land suitable for business, commercial and industrial development.
Routing the metro to the airport, for example, would open up a vast amount of development land in Eastside and eastern Birmingham.
It is by far the largest ADZ proposed anywhere in the country and is believed to be the first to cross local authority borders.
Birmingham City Council leader Mike Whitby, who chairs the shadow city region board, described the scheme as “radical and unique”.
Coun Whitby (Con Harborne) added: “Whilst other cities are developing their own proposals ours is the only one on the scale of a city region. Our plans cover a range of transport infrastructure projects that would support economic growth on a west-east axis across the city region.
“The concept is based on evidence from Chicago and our plans cover a range of transport infrastructure projects that would support economic growth across the city region.”
Jerry Blackett, chief executive at the Birmingham Chamber of Commerce and Industry, said the fight to obtain Government approval for ADZs was at the top of the business sector agenda. The system was far preferable to proposals for councils to generate additional income by levying a 2p supplementary business rate, which was unacceptable in the current economic climate.
Mr Blackett added: “This is a very ambitious plan, but we have to think big.
“In theory, the only constraints to the amount of money that could be raised is the number of new businesses willing to set up around the infrastructure we will be creating.”
Chambers of commerce in the West Midlands and in Britain’s major cities are urging the Government to include legislation in the Queen’s Speech to enable councils to set up ADZs.