Three Scottish authorities to progress with tax incremental financing proposals

Falkirk Council, Fife Council and Argyll and Bute will now work with the Scottish Futures Trust to develop full business cases for their proposed projects.

The Scottish Government had previously approved TIF schemes at Leith Waterfront, Edinburgh and the Ravenscraig phase two scheme in North Lanarkshire. Work on developing further proposals in Glasgow and Aberdeen remains underway, it said.

The use of TIF would "invigorate" the Scottish economy and was expected to create over 17,000 new jobs, the Scottish Government said.

TIF allows local authorities to fund regeneration projects by borrowing money against the predicted increase in locally-collected business taxes from the new development.

Hugh Bruce-Watt, a property law expert with Pinsent Masons, the law firm behind Out-Law.com, said that similar schemes in England and Wales had been delayed as the Government was yet to pass the necessary enabling legislation.

"These are the remaining three of the pilot schemes announced by the Scottish Government in June and, if successful, may pave the way for more such schemes. These pilots coupled with the current pipeline of revenue-funded infrastructure projects using the non-profit distributing model certainly back up the Scottish Government's claims to a 'Plan McB' to revitalise the economy and unlock further investment," he said.

He added that although there were misgivings about the effect of TIFs, the pilots were a "step forward" which may help to address those concerns.

Falkirk Council plans to use TIF invest £52 million into road improvements, flood defences in the area around the Grangemouth oil refinery and related works. The project will attract a further £365m of private sector funding and create over 5,000 jobs, it says.

Argyll and Bute's £20m proposal to extend Oban's North Pier and construct a development road to the north of the town is expected to create another 1,000 jobs.

Fife Council said that its £17m bid, to extend and improve transport links to Energy Park Fife, will create a further 1,000 jobs and will allow it to attract the largest potential offshore wind projects to the area.

Alex Neil, Cabinet Secretary for Infrastructure and Capital Investment, said the use of innovative funding models such as TIF was "imperative" as available public finance became increasingly limited.

"Driven by the Scottish Futures Trust, innovative funding models such as TIF will help invigorate our economy and deliver a legacy of infrastructure assets for communities across Scotland. Depending on progress with these pilots, we will bring forward primary legislation before the end of this Parliamentary session to roll out TIF more widely across Scotland."

In total 15 projects applied for the opportunity to pilot the scheme. Neil said that the unsuccessful bids may be allowed to progress to "ensure good geographical spread" before formal legislation was looked at.

The Scottish Government plans to publish its Infrastructure Investment Plan, which will outline its proposals for capital investment over the next decade, later this year.