Finance 

Seed finance

Support for the early testing and analysis of ConnectedCities can come from government, local enterprise partnerships, local authorities, transport providers, landowners, housing associations, developers, interest groups, universities, etc.

Infrastructure finance

Most of the finance for new public infrastructure will be provided by local authorities from their own resources (see below), developer contributions (e.g. via the community infrastructure levy), tax increment financing and government incentives.

The Cities Act will free local authorities to use capital reserves and raise loans to develop ConnectedCities, and will ease restrictions on council tax increases. It may also repatriate the business rates collected by authorities adopting the Act and/or create a higher council tax band for the most expensive residential properties.

ConnectedCities depend on timely and radical upgrades of the inter-town routes. Most of the finance for electrification and other improvements to the rail network is currently provided by Network Rail under its agreed programme, but if it is unwilling to fund a scheme despite the increase in usage, the Act will give local authorities the power to intervene.

Development corporations for new green towns and new green quarters are public bodies and their early land acquisitions will be funded by long term commercial loans underwritten by Government.

Development finance

Apart from the infrastructure, most of the finance for building the ConnectedCities will come from private sources, using the normal market methods.

In new green towns and new green quarters housebuilders and housing associations will not have to buy land and only require construction and marketing finance.

As long as people need it, social housing will be part of all new communities and will be provided by housing associations. Commercial developers’ provision of social housing under planning agreements will be confined to brownfield sites – mainly town growth zones and tentacle development in hub towns.

Long-term finance

Once the early developments are built, pension funds and private investors will provide development corporations with long-term loans at reasonable rates on the security of their future income.

When a development corporation is wound up the ConnectedCity council services its outstanding loans from the continuing ground rents.

Over time, the inter-town routes will get busier and more profitable, the loans will be paid off, and the rising ground rents will carry more of the burden of local expenditure on education, social services, transport, etc. The benefit of ConnectedCities will then accrue to the Exchequer as savings on rate and revenue support grants. With the prosperity ConnectedCities will enjoy, it is possible that most may eventually have no need of government support.