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Better late than never

20 October 2010

The Chancellor has confirmed in the comprehensive spending review that the barriers will be removed and local authorities in England will be able to begin using Tax Increment Financing.

TIFs have long been talked about as a possible way of funding regeneration during the downturn. However until now, councils in England have not had the borrowing powers to get finance for schemes based on predicted increases in tax revenues.

The government will now have to start consultations with councils on how to set up the new system and changes to council powers will need to be addressed probably in the Decentralisation and Localism Bill to be published next year.

Whilst the move is welcomed by many, caution should be applied and careful consideration to the schemes where TIFs will be used should be had. What happens if the tax increment, against which the local authority has secured the loan for a scheme, doesn’t materialise according to the cashflow forecast, it could be very messy…..

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