Clegg reveals plans to fund major regeneration projects

Deputy prime minister Nick Clegg today said the government will roll out a US fund-raising mechanism seen as key to kickstarting major regeneration projects.

Clegg used his keynote speech to the Liberal Democrat party conference in Liverpool to announce the scheme, known as Tax Increment Financing, will go ahead.

The mechanism, which is widely used to fund public infrastructure and regeneration projects in the US, allows councils to borrow money on the back of expected taxation receipts generated by new development.

The previous government had piloted the scheme with £120m set aside for accelerated development zones, but it has not been clear whether the Coalition would roll out the policy.

Clegg said: “I can announce today we will be giving local authorities the freedom to borrow against … extra business rates to help pay for additional new developments.

“This may not make the pulses race in the country at large. It does here [at the Lib Dem conference] of course. But I assure you it is the first step to breathing life back into our greatest cities.”

The policy has been key to attempts by London mayor Boris Johnson to fund a planned extension of the Northern Line to the Nine Elms regeneration area around Battersea and the new US embassy.

In addition the £1.2bn Ravenscraig regeneration scheme in North Lanarkshire, the £700m Edinburgh Waterfront Scheme and the £450m Buchanan Quarter scheme in Glasgow, have all put in bids to use the funding method.

Clegg added that projects in Sheffield, Newcastle and Leeds could also benefit from the mechanism.

He said: “Whether in Newcastle, in Sheffield, in Leeds or indeed in every city in the UK, what matters most is that finally, they will be in the driving seat, instead of waiting for a handout from Whitehall.”

Clegg said the Coalition will not let capital spending “be swept away as it has in the past” during the forthcoming round of spending cuts.

In addition he attempted to justify the Coalition’s free schools initiative, which Liberal Democrat delegates had voted not to support earlier in the day.

Clegg said: “My vision is that every school, in time, will be equal, every school equally free.”