£1bn transport fund ‘under threat’

The Government stands accused of scuppering a £1bn investment programme for West Yorkshire’s transport network with a new law forcing councils to hold an annual referendum if they wish to fund the scheme through council tax rises.

Labour has accused Ministers of “reneging” on last year’s Leeds City Region City Deal which gave councils in West Yorkshire the power to add a small levy on council tax bills in order to fund a massive investment programme in local roads and railways.

“The Government signed City Deals to improve transport infrastructure and boost local growth by allowing specific transport authorities to raise money for specific schemes,” said Shadow Local Government Minister Andy Sawford.

Sign up to our daily newsletter

The i newsletter cut through the noise

“A year on, that agreement is being torn up. It is damaging for our cities and our economy.”

When the Leeds City Deal was announced in July 2012, it was hailed by Ministers and council bosses alike as a “transformational” moment for the regional economy. For the first time, West Yorkshire transport authority Metro would be allowed to put a small levy on council tax bills to create a 10-year investment fund to spend on local roads and railways.

But a surprise new law unveiled in the Queen’s Speech states that any such levy that pushes a council’s annual increase in council tax bills above two per cent must now be put to a local referendum.

The law cleared its second reading in the Commons this week, and Communities Secretary Hilary Benn – the MP for Leeds Central – accused his opposite number Eric Pickles of seeking to undermine West Yorkshire’s plan.

“The actions of the Secretary of State in going back on a done deal will undermine confidence in the City Deal process, and harm the certainty on which sound financial planning and private investment rely,” Mr Benn said.

Council bosses across West Yorkshire and York had already drawn up a list of more than 30 major projects which they hoped to enact over the coming decade using the new fund, including a raft of station and city centre improvements, new link roads and bypasses in Leeds, Bradford and Wakefield, a bus interchange for York, a new carriageway to Leeds-Bradford Airport and an extra motorway junction to relieve congestion on the M62.

These schemes alone were forecast to create 20,000 new jobs by helping firms to expand, while opening up huge new tracts of land for housing, commercial and industrial developments.

Leeds City Council leader Keith Wakefield said that being forced to hold an annual referendum simply to raise the required money would effectively leave the scheme dead in the water.

“This is extremely disappointing,” he said. “The City Deal was allowing us to be ambitious, to have vision, to try to address transport connectivity.

“We were promised we would be able to do that. Now we are getting Government interference which prevents us trying to improve the economy through transport.”

But Local Government Minister Brandon Lewis insisted the West Yorkshire plan would only raise council tax bills by up to 0.9 per cent. He therefore suggested that should the West Yorkshire councils manage to keep their own individual council tax hikes down, the scheme could still go ahead.

“The Government’s council tax referendum measure will give protection against large increases in taxes,” Mr Lewis said.

“City Deals are important, but they are also subject to the referendum principles.

“The largest estimate for a city levy in Leeds is still well below the two per cent referendum principle – it is between 0.2 per cent and 0.9 per cent.”