Councils should forge ahead with US-style regeneration regimes, or face ‘many years’ of urban decline, MPs warn this week.
The All Party Urban Development Group (APUDG) claimed the recession would ‘severely damage regeneration projects for years to come’ unless ministers introduced new cash-raising models, such as tax increment financing (TIF) to fund major developments.
A report published by the group on 30 June also urged greater collaboration between the public and private sectors to kick-start programmes, and improved risk sharing.
TIF models have been used to successfully regenerate some US cities, such as Chicago, by allowing local authorities to borrow money for infrastructure and pay it back through increased future business rates revenues.
The group argued they could be used to regenerate facilities in long-term decline, such as London’s iconic Battersea Power Station.
Clive Betts MP, chair of the APUDG, said: ‘Piloting new funding models such as TIF could open up many doors to new financing that simply would not be available otherwise. And the pre-Budget report [this winter] is the place to do it.’
Chancellor Alistair Darling would be forced to modify, or give up Treasury control over nationally-pooled business rates under any reforms. Local government officials are keen, however, and the CLG this week closed a consultation on possible TIF pilot areas.
A CLG spokeswoman said: ‘We have asked councils to come forward with brief outlines of projects that could benefit their area… and we will report in the autumn pre-Budget report.’
Councils which have backed the introduction of TIF include Manchester, Birmingham, Edinburgh, Newcastle and Liverpool.
But some experts have warned the UK must police TIF regimes more effectively than in the US, where some local schemes have been hit by too much local competition for scarce resources and a lack of clarity about future business revenues.
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