New report – Unlocking capital investment in local economic development

An extensive and significant new report from TRL Insight, Unlocking capital investment in local economic development.

This was completed and soft-launched in February 2025.

It considers what is needed to create sustainable communities, focusing on the infrastructure provided by local authorities. This is viewed as a long-term investment. The potential returns on investment in growing communities are identified, including growth in tax collected by local and central government and savings on public expenditure.

It proposes a raft of measures to ensure that councils recoup the initial borrowing needed to pay for necessary infrastructure.

The most eye-catching of these is for councils to designate areas in which all growth in business rates and/or council tax would be retained for a period of decades, at least until an agreed level of initial borrowing is paid off. Such guaranteed retention of business rates for specific sites has been a feature of previous programmes, the most relevant of which were the three ‘New Development Deals’ agreed in 2012. The report provides a case study of the NDD developments
in Newcastle Upon Tyne, where around £1bn of investment has been unlocked and dozens of spectacular and sometimes award-winning office blocks, hotels, science buildings, accommodation blocks and other buildings have been built. So far, this has secured around 12,000 jobs and increased economic output by about £450m.

The 2026 reset of the business rate retention system (and the accompanying overhaul of New Homes Bonus) provides an opportunity for a fresh round of agreements. By including council tax retention, the benefits can be extended to residential and mixed areas as well. The report also proposes changes to the structure of the retention system which could extend some of these benefits to the whole of England.

The forthcoming creation/designation of a network of Strategic Authorities across England also provides an opportunity – for a much more collaborative, strategic approach to planning the growth of communities and supporting infrastructure. This would provide developers and other key partners with the certainty necessary to unlock many sites and inject greater capital into them.

Finally, the report discusses other changes to local taxation and grant funding which would share the gains from developments between central and local government, provide a fairer and more flexible local tax base and unblock stuck sites.