Commenting on the Chief Secretary's announcement that Greater Manchester has agreed the earnback element of its City Deal with the Treasury, Lewis Atter, Associate Partner in KPMG’s Public Sector practice, who advised Greater Manchester on the deal, said:
“This is an important milestone in a groundbreaking win:win deal. It’s putting into action a totally new approach to funding game-changing infrastructure developments in City Regions, designed to deliver economic growth and employment in their area.
“It enables Greater Manchester to build on its own investment of £1.2bn in new infrastructure, to deliver more when the growth and thus extra tax receipts for the Exchequer result from the initial investment. This deal means Greater Manchester will be able to add to its investment programme immediately, for example, the £290m SEMMMS road scheme to the airport, and other schemes in the pipeline, such as the Metrolink extension to Trafford Park will be accelerated.
“The earnback is the next step in devolution. It essentially rewards areas that step up and make bold decisions, involving their own budget, to invest in growth promoting infrastructure, as and when this produces results for the Exchequer.
“We are discussing the earnback idea with several City Regions already and are excited about the prospect of the Greater Manchester agreement representing a ‘blue print’ for funding similar regionally tailored City Deals around the country. The most advanced of these is West Yorkshire, in collaboration with York, but the Sheffield City Region is not far behind, and Greater Cambridge is in discussions with Government about a similar concept focused on the fiscal benefits of sustaining the Cambridge growth phenomenon. Glasgow and its partners in the Clyde valley are also investigating this approach.
“In Greater Manchester’s case, the deal was announced in principle last year. What the Chief Secretary has announced is that there is an agreed formula, complete with review mechanisms that will last for 30 years. Now this deal has been agreed, the region will get a share of the tax receipts its locally funded investment will deliver, kick starting a virtuous cycle of growth and investment."
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