Clegg pledges new private funding for infrastructure
COUNCILS will be handed the power to borrow against future business rates to help pay for major regeneration schemes, deputy prime minister Nick Clegg has announced.
The measure, known as tax increment financing, will give local authorities a new way of raising millions of pounds to fund major infrastructure projects that support economic development such as new transport links or business parks.
Speaking at the Liberal Democrats annual conference in Liverpool, Mr Clegg described the measure as “the first step to breathing life back into our greatest cities”.
He said: “Our leaders in Sheffield say it could allow the redevelopment of derelict mines in the Don Valley; our leaders in Newcastle believe this could help them create a new science park; in Leeds they argue the Aire Valley could be transformed.
“But whether in Newcastle, in Sheffield, in Leeds or indeed in every city in the UK. What matters most is that finally, they will be in the driving seat, instead of waiting for a handout from Whitehall.”
The Treasury said TIF would operate “within a carefully designed framework of rules” and more detail would be released alongside the comprehensive spending review next month.
Matthew Farrow, CBI head of energy, transport and planning policy, said: “We welcome the Government’s announcement that local authorities will be granted the borrowing powers required to implement tax increment financing.
“As we highlighted in our submission ahead of the Government’s spending review, TIF should be considered as a way of encouraging private sector investment in infrastructure, especially at a time of constrained public sector funds.”
Mr Clegg’s announcement pointed to a possible source of funding for projects championed by the new local enterprise partnerships which are due to replace regional development agencies.
LEPs had been expected to bid for money from a £1bn regional growth fund established by the Government but the fund’s deputy chairman Sir Ian Wrigglesworth, speaking at a conference fringe event, suggested the money was more likely to be used to support individual businesses.
Baroness Margaret Eaton, chairman of the Local Government Association, said: “It is good news the Government has listened to the calls from local government for the power to turn local tax revenue into investment that will keep our roads free from potholes, fund better public transport and make sure schools and community centres do not crumble.
“This is a recognition that local investment creates economic growth, and it recreates long-abolished incentives for councils to invest in projects to promote local jobs and businesses.”
