Darling raises industry hopes on Tax Increment Funding
Published: 09 December, 2009
Chancellor Alistair Darling has given the amber light to a new funding regime for urban regeneration schemes that could free up the development pipeline.
Prior to the Pre-Budget Report the Treasury was intensively lobbied by industry bodies calling for the introduction of a US system called Tax Incremental Funding. This allows local authorities to borrow against the future tax revenues that would be derived from new developments, in order to invest in the infrastructure necessary for the development to take place.
And in the Pre-Budget Report the Chancellor said: "The Government is interested in exploring, subject to the overall fiscal position, what further finance mechanisms, powers and flexibilities could support local authorities to drive growth and innovation most effectively.
"In light of this, the Government will continue to examine the framework that would be needed to implement Tax Increment Financing and consider the primary legislation that would be needed if schemes were to be introduced.”
The move was immediately welcomed by the lobbyists. Liz Peace, chief executive of the British Property Federation, said: "This is a good move for the industry as we all know that new funding will be extremely limited. Councils must be given the powers they need to raise funding and if we are serious about kickstarting construction then action will be needed to support Tifs and ensure that we do not stifle great opportunities to rebuild our towns."
