Budget 2015: local business rate retention rights will increase cities' ability to invest, says expert

Jon Hart of Pinsent Masons, the law firm behind Out-Law.com, said that infrastructure-related announcements in the 2015 Budget amounted to "a projection of future direction of travel for urban investment". In his speech, chancellor of the exchequer George Osborne said that the government had already reached "provisional agreement" to allow the Greater Manchester city area to retain local business rates revenue as part of the 'Northern Powerhouse' initiative and that other areas would be able to apply for the same deal.

"All of this needs to be balanced against the promise of a future review of business rates themselves, but provides a potential platform for the development by cities of their own infrastructure plans and the involvement of future private sector investment," said Hart. "This will no doubt increase the attractiveness of the UK to foreign investors, who already regard the UK as a safe haven for investment."

However, Hart said that the chancellor's announcement of the need for the government to find a further £30 billion of public spending savings over the next three years, of which £13bn would be cut from government spending, would "inevitably impact upon the pipeline for potential infrastructure projects".

The Budget statement made no reference to the National Infrastructure Plan, which is updated annually alongside the Autumn Statement and sets out the government's 'pipeline' of planned projects in the energy, transport, flood defence, waste, water and communications sectors. Hart said, though, that the report contained some "interesting nuggets of where public sector money might be spent, or at least protected" in the event of a Conservative win at the upcoming general election. These included the construction of a tidal lagoon scheme in Swansea, the 'Northern Powerhouse' project and investments in the South West and Wales, he said.

"The chancellor made no specific reference to the roads budget and newly-empowered Highways Agency," he said. "There were some welcome commitments to transport spending and a new rail franchise for the South West, and the pre-announcement of a transport strategy for the cities of the North – which will further enhance the case for HS2."

According to the Budget report, the 'Transport for the North' (TfN) advisory group announced by the chancellor in October 2014 will publish its interim 'transport strategy' later this week. This body, which is made up of representatives from the main northern city regions, will report on a number of initiatives including a formal proposal for a 'High Speed 3' rail link between Leeds and Manchester and an integrated ticketing system for use across the region.

The UK government will also commit "almost £140m" to research on infrastructure and connected 'cities of the future', as well as investment in the so-called 'Internet of Things' connecting "everything from urban transport to medical devices to household appliances", Osborne said. It has also set a "new national ambition" to bring 'ultrafast' broadband of at least 100 megabits per second to nearly all UK homes, as well as a commitment to clear new mobile spectrum bands for further auction.