Tax Increment Finance - After The Local Government Resource Review

Introduction

TIF has been the great hope of the regeneration industry for almost as long as people can remember. Under the last government, expressions of interest were invited, only for progress to stall after 84 local authorities had submitted 124 bids. Birmingham, Leeds, London (for the Northern Line Extension) and Sheffield submitted the largest pilot proposals. The total funding sought ran to £2.33bn, with the highest bid being for £400m and the lowest for £750000.

Once the Coalition came into power, the prospects for TIF at first looked bleak until Nick Clegg's announcement of 20 September 2010 at the Liberal Democrat Party Conference, '[And] I can announce today that we will be giving local authorities the freedom to borrow against those extra business rates to help pay for additional new developments.'

Nick Clegg's announcement was followed in October's Comprehensive Spending Review with statements to the effect that, 'New Powers to implement Tax Increment Financing will also be detailed in the coming white paper on local regional growth' (Para 1.81 at page 33) and 'Further detail on Tax Increment Financing and the future incentives and planning powers open to local authorities to support growth will be provided in a White Paper on local growth later this year'(Para 2.39 at page 50).

The Local Growth White Paper expanded on the CSR stating, at paras 3.38 - 3.41, '3.39 We will introduce new borrowing powers to enable authorities to carry out Tax Increment Financing. This will require legislation.

'3.40... We anticipate that TIF would, at least initially, be introduced under a bid-based process. Lessons from an initial set of projects will inform future use of the power.'

In January, CLG Ministers announced a Local Government Resource Review to consider among other things how TIF might be introduced. In mid July, CLG published a consultation document, 'Local Government Resource Review: Proposals for Business Rate Retention'. The consultation period lasts until Monday 24 October. It is the purpose of this article to consider where this document leaves English TIF and what the prospects are for the future.

Scotland

Before considering the position in England, it is worth recalling how TIF is being progressed in Scotland. On 5 November 2010, the Scottish Government published its Tax Incremental Finance Administration Pilot Scheme document and shortly afterwards approved the first scheme in Leith where £84m will be borrowed under a TIF...

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