More financial freedom for local authorities
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Issued on 20th September 2010
The Deputy Prime Minister announced today that Local Authorities in England
will be granted new borrowing powers aimed at driving local investment and
These new borrowing powers, known as Tax Increment Financing (TIF), will
allow Local Authorities to borrow against predicted growth in their locally
raised business rates. They can use that borrowing to fund key infrastructure
and other capital projects, which will support locally driven economic
development and growth.
TIF will operate within a carefully designed framework of rules, which the
Government will work closely with Local Authorities to design. More information
on how TIF will operate will be set out alongside the Spending Review.
1.Under existing legislation, Local
Authorities can borrow against their overall revenue stream. This does not
include business rates. TIF will enable them to borrow against future additional
uplift within their business rates base. Local authorities will need to manage
the costs and risk of this borrowing alongside wider borrowing under the
2. Introducing TIF will require
legislation. More information on how TIF will operate, and on the timeline for
introducing legislation will be set out in the Government’s White Paper on
sub-national growth, around the time of the Spending Review.
3. TIF has long been employed in other
countries, including the United States.
4. The Government has already announced
several measures aimed at driving economic growth, including a £1bn regional
growth fund and Local Enterprise Partnerships. In this respect TIF will form
part of a wider package of measures to support economic growth at a local
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Article Published/Sorted/Amended on Scopulus 2010-09-21 15:15:48 in Tax Articles