In its White Paper on local growth released yesterday (the "White Paper"), the Government restated its intention to legislate to introduce Tax Increment Financing ("TIF"). It also announced that it would consider options to allow local authorities to retain business rates as part of a wider review of local government resources. To inform the review, interested parties are invited to respond to questions on TIF and the business rates system set out in the White Paper. This opportunity should interest those involved in the development of infrastructure and regeneration projects that could boost economic growth.
TIF
Last week's Comprehensive Spending Review promised that the
White Paper would set out more detail on TIF. TIF is a
scheme allowing local authorities to borrow against future uplift
in business rates, as well as against current income streams and
forecast future income (as is currently the case), to fund key
infrastructure and capital projects. For more on TIF, please
click here to read our previous article.
However the White Paper does not provide much new detail on
TIF. The Government anticipates that TIF will, at least
initially, be introduced through a bid-based process. It
plans to implement a set of initial pilot projects to inform future
use of TIF and minimise the risks to central and local
government. TIF will also be shaped by the responses to the
proposals set out below. This process suggests that TIF may
be some time coming, as predicted by some industry
commentators.
Business Rates
The White Paper raises the subject of potential changes to the
business rates system. Currently business rates collected by
local authorities are pooled centrally for redistribution.
Authorities can, however, benefit from the Local Authority Business
Growth Incentive scheme, a system of ring-fenced grants awarded for
qualifying growth that was introduced in 2005-06.
The Government is now developing a Business Increase Bonus scheme
to reward business growth that exceeds targets by allowing
authorities to keep the increase. This may replace the
existing incentive scheme. In addition, the Government is
considering more radical options to allow councils to retain
locally raised business rates.
Local Government Resource Review
The Local Government Resource Review promised in the coalition agreement will now include a review of local business rate retention. The review will be launched in January after a period of consultation on the proposals in the White Paper and will collect the views of local authorities, businesses and other stakeholders.
Have your say
The White Paper invites interested parties to respond to
questions about retention of business rates and TIF.
Responses must be submitted by e-mail before 1st December
2010.
To download the White Paper and view the questions (page 29),
please click here.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 29/10/2010.
