Proposal to allow councils to borrow against future assets will ’kickstart regeneration in the UK’
Regeneration professionals were united in applauding the decision to give councils new powers to raise funds for commercial and infrastructure schemes, which was announced by deputy prime minister Nick Clegg at the Liberal Democrat conference.
Clegg, who used the news as the centrepiece of his keynote speech on Monday, said the move would “breathe life back into our greatest cities”.
The new powers, known as Tax Increment Financing (TIF), are intended to raise money to kickstart billions of pounds worth of regeneration developments, including £250m for the multi-million pound Aire Valley scheme in Leeds, £600m for the extension of the Northern tube line to Nine Elms in London, and £82m for the 170-hectare regeneration of the Eastside area of Birmingham.
The regeneration industry has spent more than 10 years trying to persuade the Treasury to agree to the funding mechanism, which has been used in the US for decades, after Richard Rogers called for it in his 1999 Urban Taskforce report.
The powers will allow councils to borrow money against rises in future business rate receipts brought by developments. The Treasury said it would legislate to give councils these powers, and would give more detail in a white paper on sub-national growth, to be published alongside the Comprehensive Spending Review on 20 October.
Jackie Sadek, director of regeneration at CBRE, said: “Hats off to Mr Clegg for extracting this promise from the Treasury. This could lead to the kickstarting of the regeneration sector in the UK. If it captures market confidence it could have a massive impact.”
The former Labour government had toyed with the idea, and launched a £120m pilot just before the last election. However, none of the money was spent, and it was not known if the coalition would support the programme.
Paul Hackett, director of the Smith Institute and formerly John Prescott’s adviser on regeneration, said: “The Lib Dems have finished off the job that was never done by Labour.”
Ray Mills, director at Pricewaterhouse Coopers, which has been advising councils on using TIFs, said: “It’ll be very important to start building and cementing relationships with councils now.”
Meanwhile, Andrew Stunell, a Lib Dem minister at the communities department, said the details of the proposed “new homes bonus” that would reward councils for homes built in their areas would be published with the 20 October spending review.
Grant Shapps, the Conservative housing minister, who made an appearance at conference fringe events, said the government would also act to keep house price growth in check.
He said: “House prices have been at the root of the economy’s boom and bust. We’ve to have a long period of housing stability. This is something we’ll be returning to as a government.”
Meanwhile, Deborah Applin, managing director of Crest Nicholson Regeneration, said the government’s abolition of regional housing targets had hit business.
“In the South-east development has come to a standstill. Councils are waiting for more details on the incentives package.”
Liberal Democrat party conference at a glance
Liverpool. The city was the biggest Lib Dem-held council with viable conference centre. Control of the council, however, fell to Labour at the election
Echo Arena, Kings Waterfront. The brand new conference centre was built with £15.5m of funding from the Northwest Regional Development Agency, a quango the coalition has now, er, abolished
6,500 - up from 4,700 last year
Key watering hole
Jury’s Inn opposite the arena
Low - traditional Lib Dem party members were outnumbered by younger and slicker colleagues, journalists, and corporate lobbyists
“Stick with us and together we will change Britain for good.” (Clegg)