By Richard Johnstone | 16 March 2012
Next week’s Budget should allow councils to address some of Britain’s £200bn infrastructure deficit, the Local Government Association said today.
In a second Budget submission to Chancellor George Osborne, this time in association with the British Property Federation, the LGA argued that it must be made easier for councils to undertake infrastructure projects and thus boost economic growth. In particular, the group wants the government to speed up the introduction of Tax Increment Financing powers.
Councils are set to be able to use Tif from April 2013, when they will also be able to retain local business rates. Under Tif, town halls can pay for the construction costs of infrastructure by borrowing against the estimated future tax income the development would generate.
The submission also wants town halls to be able to borrow against future income from the Community Infrastructure Levy, which is paid to authorities by developers. And it repeats appeals for the government to remove barriers to local authority bond issues.
LGA chair Sir Merrick Cockell said: ‘One of the key drivers of national growth is local development. With some modest adjustments to government policy, the chancellor can make it much easier to get infrastructure projects off the ground.
‘We just need the government to back the creativity and ambition shown by councils in pursuing new funding models like local government bonds and Tax Increment Financing.’
Liz Peace, BPF chief executive, added: ‘At a time when finance is in scarce, supply partnerships between local authorities and developers, and funding models such as Tax Increment Financing, will prove vital in unlocking stalled development and infrastructure projects up and down the country.
‘But Tif and other government-backed initiatives aimed at stimulating new investment will only make an impact if the government is prepared to give local authorities and their private sector partners the latitude they need.’
Meanwhile, a regional think-tank today called on the chancellor to back five major rail improvements in the North of England in his Budget speech next week.
The Northern Economic Futures Commission, convened by the Institute for Public Policy Research North, also wants the Department for Transport’s five-year plan for railway investment to support the projects. It is expected to be published in June.
The projects include the Northern Hub plan to increase capacity on lines through Manchester to allow more trains to Liverpool, Leeds and Sheffield.
The IPPR commission, formed last year, also wants the proposed High Speed 2 line between London and Birmingham to be linked to the Midland mainline as well as more electrification of northern rail lines and improvements to trains.
