New glimmer of hope for Merseytram

Jul 17 2007 by Rob Merrick, Liverpool Daily Post

THE axed Merseytram scheme will be thrown a lifeline today when the Government announces funding for major transport projects.

Chancellor Alistair Darling is expected to offer local authorities the chance to raise tens of millions of pounds through a "supplementary business rate", levied on local firms.

The idea is specifically aimed at reviving projects such as Merseytram, which appeared to have been killed off in 2005 when the Government pulled the plug on £238m of funding.

A top-up of four pence in the pound, the likely maximum, would raise more than £50m a year from businesses in an area such as Merseyside.

However, many firms are likely to oppose the move, fearing a return to the hefty rates they paid in the 1980s, when they were controlled by local authorities.

At present, local business taxes are determined in Whitehall through the "uniform business rate", with increases strictly pegged by law to inflation.

But, in March, a study commis- sioned by Gordon Brown recommen- ded a supplementary rate limited to four pence in the pound, applied to the rateable value of business properties.

The levy could, in turn, be used to fund loans, permitting councils to borrow up to seven times as much as the annual income from the charge.

However, it is likely the power could only be used after consultation with local businesses on the projects it would fund.

In fact, the CBI and the British Chambers of Commerce have demanded a referendum among firms that would be charged.

Mr Darling’s announcement will form part of a wider shake-up of local government spending powers, entitled "sub-national economic development".

Whitehall sources would not reveal the detail of today’s announcement, but signalled that supplementary business rates would form part of it.

Ironically, it was Mr Darling, when Transport Secretary, who axed Line One of Merseytram, which would have linked Knowsley to Liverpool.

He insisted he could not agree to a government contribution of £238m, up from £170m, and attacked Liverpool City Council for refusing to underwrite any cost overruns.

But Merseytravel, the passenger transport executive, refused to accept the scheme was dead and kept it in its local transport plan, detailing intended work through to 2011.

Last night, a Merseytravel spokesman said it would welcome a new power for Merseyside authorities to raise money by charging top-up business rates.

The spokesman added: "This is certainly one method of funding that would support investment in local capital projects."

Meanwhile, today’s announcement is also expected to spell the end for the North West’s unelec- ted regional assembly, condemned by critics for being a £2m "talking shop".

Its controversial powers over planning, housing and possibly transport would be handed to the regional development agency (RDA), with extra responsibilities for town halls.