The Government plans to make up to £150m available from 2013 to 2014 to fund larger scale projects in core cities. This would be financed through TiF and other additional funding, according to the Budget Documents (114-page/ 707KB PDF).
TiF allows money to be borrowed against a projected increase in locally-collected business taxes that results from the building of a new development.
Planning expert Richard Ford of Pinsent Masons, the law firm behind Out-Law.com, welcomed the progression of TiF and urged local authorities to consider their funding options carefully.
"The progression of TIF financing is a welcome step in the progress being made to source new funding mechanisms for regeneration projects. The reliability of the income streams acting as security for the TIF financing is key," said Ford.
"TIF is attractive to the growing number of local authorities with stakes in Energy Service Companies (ESCOs) and Multi-Utilities Service Companies (MUSCOs), as well as those now moving to energy generation and trading," He said.
Further details on a "competition for allocating funding" will be announced later in 2012, the Government said.
Osborne also announced that the Growing Places fund would be increased by £270m to "empower local communities and businesses to lead development in their own areas". This would include £70m for the Greater London Authority in recognition of "London’s position as the largest regional economy in the UK and unique devolution arrangements", he said.
The London Royal Docks Enterprise Zone will have enhanced capital allowances from 1 April, Osborne said in his budget speech, which has the potential to deliver over 7,500 new jobs.
"Combined with income from the New Homes Bonus, local retention of business rates and potentially CIL, these income streams can be pooled to allow TIF financing to progress on the back of a sufficiently reliable basket of income streams," said Ford, "Local authorities need to examine the opportunities carefully to boost their spending power," he said.
