A planned “enterprise zone” in Birmingham city centre has received cross-party support after Labour backed the scheme.
Sir Albert Bore, leader of the opposition Labour group on Birmingham City Council, said he welcomed plans drawn up by the Greater Birmingham and Solihull Local Enterprise Partnership for a zone covering key development sites such as the planned High Speed 2 station near Curzon Street and the refurbished New Street station.
He said the enterprise zone would raise money which could then be used to promote economic development in other parts of the city and the West Midlands.
Some politicians have expressed concern after the partnership, which is includes business leaders and local authorities, picked Birmingham city centre as the site for the Governnment-backed enterprise zone.
Richard Burden (Lab Northfield) warned last week that the city centre was already due to receive massive financial investment while other parts of Birmingham were more in need of regeneration.
But Sir Albert said he believed the best way to use the regeneration zone was to place it in an area which could be regenerated quickly, and then to use the cash raised to promote development elsewhere.
In his Budget last month, Chancellor George Osborne announced the creation of ten enterprise zones where new employers will be exempt from business rates for five years. Local authorities will then be able to keep any increase in business rates resulting from new firms coming in to the area, for up to 20 years.
And they will also be encouraged to apply for a scheme called Tax Increment Financing, which allows them to borrow money against the predicted business rate windfall.
It means that the creation of an enterprise zone could provide significant funding for regeneration projects which can be sited elsewhere.
Sir Albert said: “What lies behind this is the ability of authorities to borrow money on the basis of added business rates.
“So the question is, where are values likely to be highest? You can borrow and use that to put regeneration into other areas.”
It made sense to place the zone in Birmingham City Centre, he said. “You can bring in regeneration more quickly in an area like Birmingham City Centre.
‘‘You are more likely to get increased business rates out of that,’’ he said. “And you are talking about really big money.
“The question we need to ask is how we take advantage of what the Government has made available.”
Greater Birmingham and Solihull Local Enterprise Partnership, which includes East Staffordshire, Lichfield, Tamworth, Bromsgrove, Cannock, Redditch and Wyre Forest as well as Birmingham and Solihull, has estimated the enterprise zone could create 50,000 jobs and raise £700 million for the region.
It also plans to ask the Government for a second enterprise “belt”, which could cover the M42 corridor, taking in parts of Solihull, Warwickshire and Staffordshire.
The Black Country Local Enterprise Partnership is also working on plans for an enterprise zone. It has not yet decided where the site should be.