Among the raft of initiatives coming from the Government are two which promise new sources of funding for local authorities.

The new homes bonus and tax incremental funding (TIF) may offer a small beacon of light among all the gloom. The detail of how the schemes operate, though, will be crucial as to whether they really are new sources of income, or a mere redistribution towards authorities whose housing and business bases are growing.

At present, both council tax and non-domestic rate (NDR) income are taken into account when working out the amount of central government money that is needed to fund local government. In the normal course of things, increases in the council tax base and NDR lead to a reduction in the amount central government has to find to fund local government.

If the proposals which come forward do not treat the additional income as separate from the formula grant system, any additional resources paid to individual authorities would merely be achieved by top-slicing existing government funding for local authorities. This is the type of nil-sum gain that is often a feature of the local government finance system.

Instead, it is hoped the additional council tax and NDR resulting from the new homes bonus and tax incremental financing is kept outside of the formula grant system and really does become a new source of funding which can help to allow vital infrastructure projects to go ahead.

It could be argued that, in the long run, overall public expenditure will gain, since both schemes are likely to only allow access to the additional tax revenue for a fixed period.

Let us hope both schemes operate in such a way that there really is a new reward for local authorities to make the sort of infrastructure investments so desperately needed by the economy.

Alison Scott is assistant director, local government, at CIPFA