England’s biggest regional cities are to warn that proposed funding tools such as supplementary business rates and a planned tariff on new development will fail to provide enough finance for cities to pay for large-scale regeneration projects, Regeneration & Renewalhas learned.

A report seen by this magazine says mechanisms such as the Community Infrastructure Levy and concludes they are unlikely to generate sufficient extra revenue to fund the substantial infrastructure needed to support large projects.

The report, by accountancy PricewaterhouseCoopers and the Core Cities group, welcomes the fact that the levy will provide the private sector with certainty over future infrastructure investment. But too many unresolved issues regarding its use, such as how it will be set and used, means it might only meet a fraction of total infrastructure costs, it adds.

The study proposes new funding tools such as Accelerated Development Zones – a concept based on that of Tax Increment Financing pioneered in the United States – that use the increase in tax revenues resulting from regeneration to finance redevelopment projects.

Working with this would be Regional Infrastructure Funds, a model designed to provide upfront funding for strategic infrastructure before any development takes place, it proposes.

The report says the Government acknowledges the need for more local investment, but its current incremental approach to financial devolution is too tame and will not provide enough funding to deliver the infrastructure required.

These concerns are “compounded by uncertainty in the financial markets and the pressure on public spending”, it adds.

Sir Bob Kerslake, chief executive designate of nascent housing and regeneration super-quango the Homes and Communities Agency (Haca) said that cities have been important drivers of national economic growth over the last ten years, but had been unable to fund essential major new infrastructure projects to sustain this rate of growth in the long-term.

Kerslake said the report contains “some exciting proposals”, such as Accelerated Development Zones, which could play a “significant role in funding the major housing and regeneration schemes that the (agency) will support”.

A spokeswoman for the Department for Communities and Local Government said the Government would not directly comment on the report and its proposals until it was officially released in the autumn.