English local authorities are to be allowed to use Tax Increment Financing to build infrastructure projects vital for regeneration. This is where a local authority borrows money and then pays it back from the increase in business rates generated from the development. This could really boost big capital projects to improve areas significantly.

Two options local authorities will be allowed to follow:

Option 1. Use business rate growth from across their areas to repay the borrowing but only from new physical development – not existing buildings that already pay business rates even if those rates go up. Little bit risky from changes in business levy for areas that become very successful.

Option 2. Allowed to keep business rate revenues from a defined TIF area for a defined period of time and these funds will be exempt from the business levy or resettling systems for 25 years – similar to the Enterprise Zones.

What could Southwark build using Option2 – Bakerloo Line extension or perhaps Cross River Tram?