The West Midlands has become the first region in the UK to get ground-breaking new ‘Growth Zone’ powers capable of generating more than £1.7 billion for local councils to spend on levelling up their most deprived areas and driving future growth.

Government has given the green light for three Growth Zones to be set up with councils able to retain business rates for 25 years – using the money to help rebalance and grow the regional economy while also tackling long-standing issues causing deprivation, fuel poverty, jobs, skills and health.

One of the new Growth Zones will straddle Dudley and Sandwell, a second will be in Walsall and a third will cover parts of East Birmingham and North Solihull.

The zones, which have been identified by the local authorities, are designed to retain rates within the local authority area unlocking new public and private funding to help those areas in greatest need generate opportunities to grow.

The three zones have the potential to generate £1.7bn for regeneration investment, create 60,000 jobs and deliver 4,500 new homes. The Growth Zone proposals were secured by the West Midlands Combined Authority earlier this year as part of the region’s Deeper Devolution Deal with Government.

This has seen game-changing powers and financial controls transferred from Whitehall to the West Midlands and taken together with the Chancellor’s recent announcement for a West Midlands Investment Zone, means every local authority in the region will benefit from new financial powers to meet the priorities for their communities and businesses. Andy Street, Mayor of the West Midlands and WMCA Chair, said:

“The Deeper Devolution Deal agreed with Government back in March was a real vote of confidence in our region - placing trust in local leaders to deliver for local people.

“We’re now starting to see the promised new powers and funding flow. Alongside the recent announcement of Investment Zone status for the West Midlands - helping us to draw in money to support major schemes across Coventry, Birmingham and Wolverhampton - today’s unveiling of Growth Zones will supercharge our ability to drive forward regeneration right across our region in the places that need it most.

“By securing this new approach - where local authorities will be provided with greater financial certainty and control thanks to long term business rates retention - we can work together to revitalise local neighbourhoods and improve the lives of residents in the months and years ahead.”

Chancellor Jeremy Hunt’s Autumn Statement saw the West Midlands declared an Investment Zone powered by sites in Wolverhampton, Birmingham and Coventry/Warwick and accompanied by millions of pounds of funding for new infrastructure, tax breaks and other incentives for companies and business rate retention for the local councils.

Those three Investment Zone sites alone have the power to drive up to £5.5bn of growth across the region, and more than 30,000 new jobs by 2034.

The new Growth Zones will complement the Investment Zone and generate even more money for the region by giving local authorities hosting the new Growth Zones the ability to retain business rates from those sites.

The Zones have been developed jointly by the local authorities and the WMCA working closely with the Department for Levelling Up, Homes and Communities, based on regeneration priorities and making the most of key transport corridors including forthcoming Metro extensions and highway connections around Junction 10 of the M6.

This is the first time that Government has deployed ‘Growth Zones’ – enabling local councils in a region to retain 100% of their business rates for 25 years to support comprehensive regeneration that could include new development, job opportunities, community facilities and housing. Cllr Sharon Thompson, the WMCA’s portfolio holder for levelling up and devolution, said:

"This welcome announcement demonstrates the true potential of devolution: local councils identifying their areas of greatest opportunity, proposing innovative approaches to regeneration that meet local need, and then working with the Combined Authority to draw down new powers from Government.

“Our challenge now is to harness these additional powers to truly level up for some of the most economically challenged communities in the country after a decade of hardship.

"Through these new approaches agreed with Government, we have an opportunity to improve lives and life chances, drive growth and deliver improved public services."

The ability for councils to retain business rates generated in the zones is crucial in enabling them and the WMCA to develop funding strategies to bring forward priority infrastructure and regeneration projects across the wider region. These include better transport, housing, skills training and community facilities, and how opportunities for how public services are delivered.

The three Growth Zones will drive growth, improve the quality of life for residents and businesses and deliver better public services for those areas identified by local councils as priorities for levelling up.

Cllr Patrick Harley, leader of Dudley Council, said: “The introduction of Growth Zones is an important part of a wider devolution deal which I hugely welcome.

“I have always been clear in my opinion that local decisions should be taken by local people.

“The Growth Zones will allow us to retain 100 per cent of business rates over a 25-year period, bringing in potentially millions of extra pounds.

“On top of that, thanks to the devolution deal, as civic leaders we will have a greater say on where that crucial extra income should be spent locally. “We want to create new jobs and new homes, and drive investment in areas of the borough that need it.”

The Growth Zones are now in the process of going through the necessary legal procedures within Government prior to formal sign-off.