Nick Maltby, partner at Bircham Dyson Bell LLP is calling for the Government to opt for ring-fenced Tax Incremental Finance (TIF) to fund the much needed infrastructure projects in English towns and cities.
The request comes off the back of the Centre for Cities research and the close of the Government's consultation period into which method would be best deployed to achieve a successful system for financing infrastructure.
"It seems that everyone would like to see 'Option 2' deployed; a ring fenced TIF which is best suited for local investment finance within the proposed business rate retention system - except for the Government," explains Nick Maltby.
"The idea behind TIF is to capitalise on the fact that public investments support additional business activity which in turn generates extra tax receipts over time. But initial expenditure to fund projects is required - so allowing local authorities to use anticipated future tax revenue growth can gain financial support for infrastructure.
"The Government is against Option 2 as it takes money from the overall local authorities pot - so perhaps there will be an 'Option 3' which is 'Treasury-friendly' where some of the additional tax is given back to the Treasury. The main thing that we need in any system is long term business certainty.
"Whatever the solution - we need to find a long term source of finance for infrastructure. TIF has been a long time coming and the Government's tardiness is definitely costing our towns and cities dear."
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