The Deputy Prime Minister announced today that Local Authorities in England will be granted new borrowing powers aimed at driving local investment and economic growth.
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.
Notes for editors
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 prudential code
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.
TIF has long been employed in other countries, including the United States.
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 authority level.