When the Government introduces Tax Increment Financing (TIF), it should be based on Option 2–a ringfenced TIF which is best suited for local investment finance within the proposed business rate retention system. Ringfenced TIFs protect the revenue streams of business rates uplift within an area and provide the necessary clarity and certainty. In doing so, the Government will face difficult choices on how to ration TIF in a way that keeps national debt at a reasonable level while not preventing worthy projects. At the same time, the Government must recognise that TIF is not a viable option for every city, and it should provide the necessary tools and guidance for cities to determine if TIF is right for them as soon as possible, so preparations can move ahead.
TIF is not the answer to local development challenges, but, if designed the right way, it can provide new opportunities for the UK’s cities to invest in their growth.
Senior Consultant, City Economics at Arup