Out-Law News 1 min. read
05 Oct 2012, 3:55 pm
Peers will request that TIF not count as public expenditure and will seek to prevent the Treasury from setting an arbitrary limit on the number of permitted TIF schemes and a time limit on when they can begin. By not counting TIF as public expenditure the impact on the public sector deficit would be neutral, backbenchers have said.
The Government's proposals, set out in the Local Government Finance Bill, will allow local authorities to retain the growth in business rates in areas that use TIF. The proposals set out two types of TIF. The first type is a simple retention of business rates and does not involve future borrowing. The second, known as "Option 2TIF", is a scheme which allows for borrowing against future business rate income. Borrowing in the second scheme is capped at £150 million.
The proposed amendments will be brought forward by Lord Tope and Baroness Kramer when the Local Government Finance Bill is going through the report stage in the House of Lords next week.
The amendments are backed by the Local Government Association (LGA), which has previously spoken out against the Government's proposals. In its pre-budget submission (4-page / 33KB PDF) the LGA said it was concerned with the way Option 2TIF was to be "tightly rationed" and said this would mean missing out on funding for growth support infrastructure.
"TIF could be a major engine of growth in a significant number of local situations, but the Government is in danger of missing the opportunity that TIF represents. We remain committed, however, to working constructively with government to make TIF the success we believe it can be," the HCA said.
TIF has been used as a form of regeneration funding in the US for many years. It allows money to be raised for infrastructure for regeneration projects by committing incremental business rates to be used to repay that initial investment. It has recently been introduced in Scotland. The Government is expecting to introduce TIF from April 2013.
