Government backing needed to drive infrastructure investment
0The Local Government Association has joined with the British Property Federation to ask the Chancellor to make it easier for Local Authorities to invest in infrastructure.
In a joint pre-budget statement the organisations ask for a raft of measures from the Government including:
• De-ring fencing of capital grants
• Tax-free status for LA bond investors
• Removal of withholding tax from interest payments from Local Authority bonds
• Greater powers for councils to use Tax Increment Financing
• Allowance of prudential borrowing against Community Infrastructure Levy
• Expansion of City Deals to further LA autonomy
Ring-fencing grants can mean funding is not spent in the most efficient way, the statement said, leading to duplication of effort and a lack of strategic approach to infrastructure provision.
“We need the Government to back the creativity and ambition shown by councils in pursuing new funding models like local government bonds and Tax Increment Financing,” said LGA chairman Sir Merrick Cockell.
Liz Pearce, chief executive of the British Property Federation, commented: “At a time when finance is in scarce supply partnerships between local authorities and developers, and funding models such as Tax Increment Financing, will prove vital in unlocking stalled development and infrastructure projects up and down the country.
“But TIF and other Government-backed initiatives aimed at stimulating new investment will only make an impact if the Government is prepared to give local authorities and their private sector partners the latitude they need.”
The latest suggestions come on top of the LGA’s call for councils to be allowed to issue infrastructure bonds to plug the £200bn infrastructure gap. The organisation suggests that local authority bonds issued to fund infrastructure should be given maximum tax efficiency by lifting withholding tax from interest payments and making both income and capital gains to investors tax-free.
