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Designated Growth Areas

Answer

Mainstream Government funding is, by its nature, determined by the relevant Government Departments based on their own procedures for allocating funding towards meeting their objectives under their Public Service Agreement. For most Government programmes, this is covered by the periodic spending reviews. The Office of the Deputy Prime Minister has been working with Departments towards ensuring that growth is given due consideration in the allocation of funding. In a number of cases this would follow in the ordinary course, simply because funding levels are based on (among other factors) population. In other cases, specific mechanisms are available to safeguard rapidly growing areas.To give an example from the Office of the Deputy Prime Minister's own departmental expenditure, population is an important factor in the allocation of revenue support grant (RSG) to local authorities. As a result of recent changes to the formula for allocating RSG, namely the abolition of ““ceilings”” and (as from 2006–07) the use of forward-looking population data, local government funding will be more responsive to the relatively rapid population growth associated with growth areas.By way of example from another Department, capital funding from the Department for Education and Skills (DfES) for new schools places responds formulaically to local authorities' estimates of pupil numbers. Local authorities in the growth areas should therefore be taking account of growth plans in their submission to DfES. Nonetheless, a ““safety valve”” mechanism has been put in place to allow exceptional needs resulting from unanticipated factors (which could include growth in pupil numbers) to be taken into account. A number of growth locations have accessed funding under this mechanism.The Office of the Deputy Prime Minister has made grant funding available exclusively in support of projects in the growth areas. The total amount of such funding, up to and including 2007–08, is around £1.25 billion. This does not include the £200 million to be made available to the growth areas by Department for Transport under the community infrastructure fund. Expenditure beyond 2007–08 will be subject to the forthcoming Comprehensive Spending Review. This expenditure will lever in funding from other sources. For example, it was estimated that the initial round of ODPM funding (amounting to just over £600m) would lever in funding of over £3 billion from other public and private sector partners (not including Department for Transport funding).Private sector investment will respond to opportunities presented by the growth areas, e.g. investment by the privately owned utilities in water, wastewater and electricity supply infrastructure. In addition, housing developers will be expected to contribute to the infrastructure costs associated with housing development through Section 106 contributions. A good example of this is in Milton Keynes, where the local delivery vehicle Milton Keynes Partnerships Committee has been negotiating a standard charge of over £18,000 per house from developers in the east and west expansion flanks. This will generate approximately £300 million of funding to complement circa £900 million of funding from public sources in support of infrastructure to facilitate construction of 15,000 houses to 2016.

Secondary information

Type

Written question

Reference

440 c1501-2W;440 c1500-1W; 31848

Session

2005-06

Related items

Designated Growth Areas
Monday, 9 January 2006
Written questions
House of Commons

Subjects

Construction Housing Finance Infrastructure Grants Milton Keynes

Contains statistics

Yes