Pioneering funding tool bids approved

Three councils in Scotland have been given the go-ahead by the Scottish government to develop proposals to pilot a US-style funding mechanism, it was announced yesterday.

Oban: TIF bid approved
Oban: TIF bid approved
Earlier this year, Scottish infrastructure investment body the Scottish Futures Trust (SFT) invited expressions of interest from councils to use the Tax Increment Financing (TIF) mechanism, which allows local authorities to fund new infrastructure by borrowing against future uplifts in business rates.

In September, the SFT received 16 bids from 15 local authorities, from which it selected three bids to be sent to the Scottish government for approval. All three bids have now been approved.

The successful councils are Falkirk, Fife and Argyll and Bute, which have been given permission to borrow £52 million, £17 million and £20 million respectively.

They join the City of Edinburgh Council and North Lanarkshire Council, whose TIF busines cases were approved previous to the  bidding round.

Cabinet secretary for infrastructure and capital investment Alex Neil said: "As Westminster cuts bite, it is imperative that we do all we can with the increasingly limited public finances available to assist regeneration by levering in additional private sector capital."

"Driven by the Scottish Futures Trust, innovative funding models such as TIF will help invigorate our economy and deliver a legacy of infrastructure assets for communities across Scotland."

Neil said that if the currently approved TIF projects prove successful, he would bring forward primary legislation within the current parliamentary session that would allow TIF to be rolled out across Scotland.

However, he added some of the 13 bids that were unsuccessful in the last bidding round could be approved before legislation is brought forward.

In addition to the bids that were given the go-ahead through the bidding process, the Scottish government said that both Glasgow City Council and Aberdeen City Council are working on TIF bids, which it expects to be submitted imminently.

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