Local knowledge

As all developers full well know, successfully courting the local community for a planned development can be a proverbial minefield of difficulties. With potential pitfalls at every turn, ensuring that local residents are extensively consulted is a tenant of any good developer. However, following the announcement from the Deputy Prime Minister, Nick Clegg about the new powers that local authorities have been granted, things could change once again.

These new borrowing powers are known as Tax Increment Financing (TIF). In the long-run they will allow Local Authorities to borrow against predicted growth in their locally raised business rates. This borrowing can then be used to fund key infrastructure and other primary projects, which will guide and sustain locally driven economic development and future growth.

Under the plan the possibilities are huge. Local Councils and other accredited authorities could use the capital in an assortment of ways. Primarily, the continued funding of local regeneration schemes, such as new shopping centres, transport links and major buildings could play a massive part in the rejuvenation of particular areas of the UK.

A safe set of hands
Nick Clegg has been particularly vocal in his vindication of the project, and believes that the scheme is a prime demonstration of local government being put back in control of the money it raises and invests.

“I assure you it is 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 scheme is one of numerous governmental directives aimed at driving economic growth, including a £1bn regional growth fund and Local Enterprise Partnerships. It is widely expected that TIF will form the backbone of these measures to expand and drive greater economic growth at a local authority level.

Capital potential
One vehement supporter of the TIF system is London’s Mayor, Boris Johnson, who is said to have written to the Chancellor, George Osborne, expressing his urge to have the system implemented as soon as possible.

The scheme has been used extensively within the US, where it has helped kick-start regeneration programmes and help fund major community projects. Furthermore, it also attempts to guard against the potential of unmanageable debt levels local authorities may face through large investment schemes. Mayor Johnson believes that the scheme could provide the perfect springboard for future development in the Battersea Power Station area, and has the potential to create almost 25,000 new jobs and the development of around 16,000 new homes.

While TIF could undoubtedly have a hugely positive effect on local areas, its implementation and introduction will take time. TIF will require further legislation to be created and extensive debates between the assorted arms of the government will need to take place. Concrete information on how TIF will operate and its scheduled timeline for introduction is set to be laid out in the Government’s White Paper on sub-national growth, around the time of the Spending Review.

Ultimately, until these details are released with greater clarity, the TIF scheme still remains an enticing prospect. If successfully implemented, it could lead to a dynamic shift in reliance from outside investors and potentially a move towards local communities and organisations making the important decisions on the future of their area.