Posts Tagged 'Tax Increment Financing'

New local growth proposals will benefit Brighton & Hove

The announcement that our proposal for setting up a new Local Enterprise Partnership – “Coast to Capital” – had been successful grabbed most of the headlines this week. But there were also a number of other important pro-business proposals announced as part of the Local Growth White Paper which passed under the radar somewhat and which I would like to highlight.

In particular, I warmly welcome the proposals around restoring a degree of local accountability to business rates.

Under the current system councils such as Brighton & Hove collect business rates but they are then passed straight to central Government who redistribute them to all local authorities according to a complicated ‘needs’ formula. Over £20bn of business rates collected by councils are pooled and redistributed in this way. The result is that whilst councils have a vital role in supporting the local economy, we have very little financial incentive for encouraging new business start ups.

So, the Government is now proposing that we be allowed to keep the money we raise in new business rates, thereby giving us a more direct stake in the future of our local economies and access to funding to deliver services that our communities (and businesses) need. This is not a full relocalisation of business rates that many people are calling for but it is nevertheless an important step forward and emphasises once again the Coalition Government’s ‘localist’ credentials.

Hand in hand with this is the proposal to introduce new powers for councils to borrow money for regeneration schemes against the future business rate revenues that the redevelopment would bring in. This so-called Tax Increment Financing is widespread in many other countries, in particular, the USA, and I would warmly welcome this in Brighton & Hove. Finding funding for major projects is never easy, particularly in the current economic climate and this would give us another viable option for business redevelopments.

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