Scottish Government backs first project to use tax increment financing

The Scottish Government has backed an £84m project in Edinburgh that – if it goes ahead – would see tax incremental financing (TIF) used for the first time in the UK.

The project involves the development of a new cruise liner terminal, lock gates, esplanade and link road on the city’s waterfront. Its supporters say the project could unlock £660m in private investment and create up to 4,900 jobs.

Finance Secretary John Swinney has provisionally approved the business case put forward by City of Edinburgh Council and the Scottish Futures Trust.

The trust, which has been developing TIF for use in Scotland, is working with a number of local authorities on pilot projects.

The Edinburgh announcement comes just days after Deputy Prime Minister Nick Clegg said local authorities would be given the opportunity to use TIF to fund infrastructure and other capital projects.

Cllr Jenny Dawe, Edinburgh’s leader, said: “Attracting new investment is critical to the city’s future and I warmly welcome the Scottish Government’s support. We produced a clear and compelling business case for the use of TIF to help transform Edinburgh’s waterfront into a more attractive area for living, working and leisure.

“Our aim is to kick-start growth, which will protect and create jobs now rather than waiting until the economy recovers. As well as being an innovative step, this shows we are being proactive and looking out for Edinburgh’s long-term success.”

Swinney said: “Westminster cuts to the Scottish Budget have emphasised the importance of finding new funding models to deliver crucial infrastructure projects such as the Edinburgh Waterfront, that can unlock further economic development whilst ensuring maximum value for the public purse.”