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Mayor of London calls for chance to use tax increment funding

The Mayor of London has called on the Chancellor of the Exchequer to deliver a commitment to the principle of tax increment funding (TIF) in the Emergency Budget on 22 June.

In a letter to George Osborne, Boris Johnson said he would like to see clauses in the Decentralisation and Localism Bill to enable TIF schemes to proceed.

The Mayor acknowledged that this would represent a variation of the government’s intention that local authorities should be able to retain some uplift in the business rate.

Johnson said that schemes should have to demonstrate sufficient “additonality” to justify such funding and encourage private sector investment and innovation.

He claimed that TIF had the potential to regenerate Battersea Power Station and surrounding areas, delivering 20,000-25,000 jobs and at least 16,000 new homes.

In his letter, the Mayor also called for:

  • Crossrail to be constructed in full and on time
  • The Tube upgrade to be supported in full as part of Transport for London’s agreed financial settlement
  • Sufficient funding for his manifesto commitment to deliver 50,000 affordable homes by 2012
  • Adequate funding devolved to the office of the Mayor “to ensure the fulfilment of my statutory responsibility to promote economic development in London, pending any longer-term reconstitution of the Greater London Authority group”
  • Rationalisation of environmental grant funds, converting them into loans, and incentives for private sector investment in environmental initiatives
  • Recognition of the importance of investing to maintain growth, and
  • A commitment to return the UK to being one of the most competitive business environments in the world.

Johnson added: “I very much welcome your commitment to a fully consultative process during the Spending Review involving all tiers of government and the private sector. As part of that process, we believe that there should be a review of fiscal devolution specifically for London.”

A number of local authorities in Scotland are also understood to be considering TIF in a bid to keep projects on track at a time of cuts to public expenditure.