The Treasury, in chancellor George Osborne's Autumn Statement last week, announced that it was considering granting the borrowing powers to help fund the extension of the Northern Line to Battersea via the new development.
The news means that the London Borough of Wandsworth, which is currently drawing up its plans to implement the Community Infrastructure Levy (CIL) (see Business News, p15), could be the first authority in the country to benefit from the powers, which were introduced in April 2010.
The statement said: "The government today announces its support for the extension of the Northern Line to Battersea and will consider allowing local borrowing against future receipts of CIL to support this, subject to commitment by April 2013 from a developer to contribute and develop the site."
The document added that "as part of its commitment to enable Tax Increment Financing", ministers would also consider allowing city mayors to borrow against future CIL receipts "where this can make a significant contribution to national infrastructure".
The former Labour government gave local authorities the power to borrow against future CIL receipts in an attempt to allow the provision of infrastructure at an early stage of a project. Ministerial permission is required in order for the councils to implement the initiative.
However, Gerry Hughes, executive director at property consultancy GVA, raised doubts about the feasibility of the move.
He said: "Receipts from CIL are not guaranteed, and depend on development coming forward. Because it could be difficult to estimate how much money will finally be received, it might be tricky to raise cash on the back of the levy."
He added that, in many areas, CIL income would not be high enough to support infrastructure development.
However, Jerry Freeman, senior director at real estate firm CBRE, said: "There are some difficulties about calculating future receipts, but this is a positive step forward."
The government also said it was considering creating an enterprise zone in Battersea to support the area's regeneration.
The Northern Line extension is one of 40 infrastructure projects already in the pipeline that were identified in the National Infrastructure Plan - published alongside the Autumn Statement - as national priorities that will receive help from the government to ensure they are delivered.
Other schemes include a new Thames crossing, proposals for a nuclear power station at Hinkley Point, upgrades to the A14 trunk road in the East of England and the electrification of the Transpennine Express rail link.
The government said that it would act to resolve barriers to the schemes by working with private investors and contractors to better understand the blockages, address key areas of policy holding schemes up and improve conditions for private investment to support growth projects.
In addition, chief secretary to the Treasury Danny Alexander has been appointed to chair a new cabinet committee that will monitor progress on the schemes.
Key Autumn Statement Measures
- Planning appeals process to be reviewed to improve consistency and certainty of decision timescales
- A pledge to ensure key consenting and advisory agencies have a remit to promote sustainable development
- Review of habitats rules to ensure compliance with European directives does not delay developments
- An additional investment of £1 billion in the Regional Growth Fund
- Two new enterprise zones in East Riding of Yorkshire and Lancashire
- An investment of £100 million to create up to ten "super-connected cities" across the UK with city-wide high-speed mobile coverage
- An extra £5 billion for infrastructure in the current spending review period
- A memorandum of understanding with UK pension funds to support extra investment in infrastructure.