Alistair Darling hints at cash to boost North economy

Apr 24 2009 by Adrian Pearson, The Journal

CITY leaders believe a single sentence buried within the Budget could lead to a multi-million pound boost to the North East economy.

Chancellor Alistair Darling has hinted he is prepared to listen to pleas from Newcastle Council to borrow cash and use it to invest up to £40m in Science City and the Discovery Quarter.

Officers believe the cash would bring in £29m a year in just over a decade and generate more than 600 jobs in the short term.

They say the money for the investment could be paid back if the Treasury agrees to let the city keep some of the increased business taxes which the development work will generate.

This has previously been a sticking point between city staff and Whitehall spending bosses.

But in his 268-page Budget document Alistair Darling made it clear he is a step closer to handing over a share of the much-guarded business rates.

Treasury officials, the Budget explained, will be told to look at the benefits of Accelerated Development Zones and the money that would come “by allowing investment in infrastructure to be financed from the increased property tax base” generated as a result of city spending.

If Newcastle gets the go-ahead later this year it will borrow money, build the roads and power infrastructure needed to attract major developers, then sit back and watch as companies move in and bring with them extra tax.

City treasurer Paul Woods said he is confident this increased money will pay off the potentially crippling debt.

He said: “We think the Budget has opened the door to this, but there is still a mountain to climb before they give us permission to do this.