Local Government Finance Bill promotes TIF and local business rate retention

Author: Michael Donnelly, Planning Magazine - Dec 19, 2011

A bill that will introduce an infrastructure funding mechanism that is intended to allow English local authorities to unlock stalled regeneration schemes will be launched today, communities secretary Eric Pickles has announced.

Tax increment financing (TIF) is used in the USA, and allows public bodies to borrow money to fund the infrastructure required to get a project off the ground against the anticipated uplift in business rates expected from that development.

The Scottish Government set up the UK’s first TIF scheme last year to help unlock development on its Leith Docks project, which had stalled as a result of the credit crunch and subsequent recession.

In a statement today, Pickles said the Local Government Finance Bill would "provide local authorities with the framework to implement Tax Increment Financing".

Pickles also announced a raft of other changes to local government finance, including reforms to enable councils to keep a share of business rates they collect rather than paying them back to Whitehall.

Pickles said: "We need to restore the country to strong sustainable growth and local government has a key part to play in this. For too long councils have been hamstrung and discouraged by a system that failed to encourage and reward economic success.

"This isn't simply about redistributing the proceeds of growth. If these reforms lead to every council working as hard as it possibly can to help businesses thrive, then they have the potential to benefit individually and increase growth overall".

Pickles' ministerial statement on the bill is available here.

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