Report backs £2bn TIF for Liverpool’s HS2 link
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British Chambers of Commerce (2013)
Liverpool City Region could subsidise the cost of connecting to the High Speed 2 route by borrowing up to £2.3bn against business rates, according to a new report.
A detailed study by think tank ResPublica proposes the use of tax incremental financing to pay for up to two thirds of the cost of creating a link to join the line north of Crewe.
The pot could also be supplemented by borrowing against receipts from toll charges on the Mersey Tunnels, the report said.
Liverpool mayor Joe Anderson said: “Our funding plan would make up the bulk of the price with £2bn coming from keeping hold of locally raised taxes, rather than sending them to the Treasury. Using this mechanism would allow both ourselves and the wider economy to move closer to prosperity.”
The report considers a range of scenarios of how much cash could be raised from borrowing against business rates, depending on factors including different job growth rates and borrowing costs.
All depend on a 35-year payback period and include the retention of employers’ National Insurance contributions collected within the city region.
The most optimistic scenario, where borrowing took place at 3.5% and jobs growth of 73,000 by 2030 would support a loan of £2.3bn.
The least optimistic, where only 42,000 jobs were created and interest rates were 4.5% would support a loan of £620m.
“The funding mechanism we propose captures only the growth achieved in the city region which is additional to baseline forecasts and therefore attributable to changes discussed in this report,” the authors said.
In addition, ResPublica said that surplus annual revenues from the Mersey Tunnels of between £12m and £14m would allow a further £500m of borrowing over a 35-year period.
The report said that the combined loans could create “a new fund worth £2bn, to finance over two thirds of the capital expenditure it is estimated will be required to construct the high speed rail link recommended in this report.
“This recommendation is in accordance with the principles of devolution and localism to which the Government is committed.”
Geoffrey Piper, chief executive of the North West Business Leadership Team, said: “I urge Government and Transport for the North to support the plans set out in this report for early introduction of a High Speed link out of Liverpool.
“This link is crucial for maintaining Liverpool’s economic recovery and employment growth.”
Louise Ellman, MP for Liverpool Riverside and chair of the House of Commons transport select committee, said: “Liverpool must benefit fully from the important national investment in HS2.
“These proposals are well thought out and must be seriously considered.”
Photo (cropped): British Chambers of Commerce, Flickr.
