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Welsh Lib Dems win Government Commitment to Welsh Urban Regeneration

September 30, 2010 2:29 PM

The Welsh Liberal Democrats have persuaded the ruling Plaid-Labour coalition to seek to adopt a radical new approach to financing redevelopment across Wales, which could see new town redevelopments funded through future business rates.

The scheme, known as Tax Increment Financing (TIF), has been already announced for England by Deputy Prime Minister, Nick Clegg MP. The Welsh Liberal Democrats will continue to call for a similar programme to be introduced in Wales, so that Welsh towns and cities are not left behind.

In a debate in the Assembly yesterday the Welsh Lib Dem Assembly team formally proposed the introduction of a similar scheme for Wales. TIF will enable local authorities to borrow against extra business rates to pay for additional new developments.

The amendment was passed with cross party support. Commenting, Shadow Economy Minister, Jenny Randerson AM said:

"It is imperative that the Welsh Government moves quickly to take advantage of this opportunity. Wales isalready the least competitive nation in the United Kingdom and with Labour having left us with the largest peacetime deficit in history, the money is notavailable to develop large new regeneration schemes.

"It is encouraging that this measure has received all party support.

"I will be pushing this idea to make sure that the Welsh Assembly Government remain true to this vote. They must not think that they can vote for it and then forget about it. Businesses don't have time to waste.

"This exciting new scheme would allow local Councils to borrow sensibly and sustainably, using the extrabusiness rates they would receive to finance the loans."

"It wouldn't be a huge amount of work for the Welsh Government to make sure that Welsh communities could rejuvenate areas that have lacked investment in the past.

"The Labour/Plaid Government must now take action to make sure Wales isn't left behind England yet again"

ENDS

Notes to editors:

1. Tax Increment Financing (TIF) is a mechanism that allows local authorities to borrow money tofund new developments by using the business rates that they will accrue in thefuture as collateral. This scheme would allow local Councils to borrow money now using the extra business rates they would receive to pay off the loans.

2. In order to take this opportunity, the Welsh Government needs to do two things. Firstly, it would need to pass the necessary legislation enabling local authorities toadopt the scheme and secondly, it would need to agree to ring-fence thebusiness rates from these developments.

3. A wide-range ofexpert opinion is aligning behind Tax Increment Financing in the last few years. The Financial Times has called it "vital", Professor Brian Morgan from UWIC called it "innovative" and Cardiff Council warning of a "significant risk that Wales could suffer" if this programme is not implemented by WAG.

4. Amendments 1 and 2 were passed , as was the motion as amended. Attached is the voting record.

Item 7: Welsh Conservatives Debate (60 mins)

NDM4542 Nick Ramsay (Monmouth)

The National Assembly for Wales:

Regrets that the Welsh Assembly Government has not introduced a more extensive Business Rates Relief Scheme to encourage enterprise in the small business sector.

The Summary of Rates Relief for Small Businesses in Wales 2010 can be accessed via the following hyperlink: http://wales.gov.uk/topics/localgovernment/finandfunding/nondomesticrates/ratesrelief/?lang=en

The following amendments have been tabled:

Amendment 1 - Jane Hutt (Vale of Glamorgan)

Delete all and replace with:

The National Assembly forWales:

1. Welcomes the enhancement to the Welsh Assembly Government rate relief scheme for small businesses in Wales that will mean more than half of businesses paying significantly reduced or no rates for the 12 months from 1 October 2010 and;

2. Acknowledges that the Welsh Assembly Government would be able to consider providing further enhancements to the rate relief scheme if the U.K. Government is prepared toensure fairer funding for Wales, as recommended by the Holtham Commission.

Amendment 2 - Peter Black (South Wales West)

Add as new point at end of motion:

Believes that a system of tax increment financing to enable local authorities to borrow against future income from business rates will help local authorities to invest in capital projects to encourage enterprise in the small business sector.

ENDS