Parliamentary view - Clive Betts

23.10.09

I was in Washington DC last month on an exchange programme between MPs and congressmen — and what a time to be there. President Barack Obama’s speech on healthcare reform to a rare joint session of congress was fascinating — not just for his words and oratory, but also the combination of excitement and outright disdain all mixed in.

As well as gaining a better understanding of the US political system, I also hope to take a policy lesson or two back to Westminster. I have looked to Obama’s old stomping ground of Chicago to find a particular lesson I believe could be a critical tool to help the UK get through the recession.

Lessons from America Tax increment financing (TIF) has been and continues to be used throughout the US. This model, which is based around new regeneration projects, has brought enormous investment into some of the most deprived areas.

TIF works on the principle that regeneration in many cases leads to an increase in business rates revenue and capital is raised against that tax increment to fund infrastructure for the project upfront.

The TIF idea has been floating around the UK for a few years now, but has more recently gained momentum with a government announcement earlier this year to explore the concept in the Budget. That is why, as the chairman of the All Party Urban Development Group, I decided that I will explore this idea with the group in the spring. I foresaw an increasing problem for areas in need of investment and regeneration, and wondered whether TIF could hold the key to unlocking the necessary funding, or if perhaps there were other options to help our cities out of their economic difficulties.

During the group’s inquiry, we spoke to and heard from more than 45 different types of stakeholders in regeneration. The overwhelming conclusion was that both the public and private sectors were eager to get together and work collaboratively. Each side was quite clear that they could not go it alone.

Our research found that partnerships and collaboration between both sectors — through tools such as TIF — were essential to secure investment and ensure the places that most needed jobs and homes could get them now, not later. Over the summer, much work was done behind the scenes by local authorities through the Core Cities group, and by the property sector through the British Property Federation, to work through the detail of possible TIF pilots.

Just as Obama has urged congress and the American people that now is the time for healthcare reform, I believe now is the time for TIF in the UK. Perhaps I am overstating the point, but the recession requires that we make every tool available to the public and private sectors to encourage investment in jobs and communities now. TIF is one of those tools.

The chancellor must press on with TIFs in his pre-Budget report. He must not allow officials to become bogged down by minor technical hang-ups — the biggest threat at the moment.

As my group’s report, Regeneration in the Recession, recommends, the pre-Budget report must pave the way for TIF pilots if we want investment in jobs and homes in our communities now.

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