NEWS
First TIF projects approved in Scotland
The first tax-increment financing (TIF) projects have been con- firmed in Scotland, pointing the way for future UK infrastructure development.
North Lanarkshire Council has got the go-ahead to use TIF to fund the £73m second phase of the redevelopment of the former Ravenscraig Steelworks site in Motherwell, borrowing cash from the Public Works Loan Board against anticipated future tax rev- enues generated from infrastruc- ture projects.
An £84m upgrade of Edinburgh’s waterfront to be funded via TIF, provisionally approved in September last year, has also now been formally agreed.
Peter Reekie, director of finance and structures at the Scottish Futures Trust (SFT), which de- veloped the idea, said: “I am delighted the Ravenscraig TIF project has received provisional approval and Edinburgh’s wa- terfront TIF proposals have been agreed in detail between the City of Edinburgh Council and the Scottish Government.
“SFT has led the development of the TIF model for use in Scotland and worked with the local author- ities to bring forward the business
Civil service pay spiralling – NAO report
A surge in the number of managers and senior civil servants is sending Whitehall payroll costs out of con- trol – despite staff numbers falling by 1%.
A National Audit Office (NAO) re- port said the wage bill for about 500,000 central government em- ployees rose 10% to £16.4bn over the past decade.
cases which together will bring £150m investment in infrastruc- ture, unlocking more than £1bn of private investment in these re- generation areas.
“TIF is an innovative way to fund growth from growth which will support jobs and the economic recovery and bring additional in- vestment at a time of a reduction in capital budgets in the public sector.”
The use of TIF to fund infrastruc- ture also has the backing of CBI Scotland.
The UK-wide Department for Communities and Local Government says it “remains committed” to introduce new borrowing powers to allow TIF projects. It is included in the Local Government Resource Review, which will begin delivering reform proposals from July.
Amyas Morse, head of the NAO, said: “Increasing numbers of high- er grade posts have led to much of the recent cost growth. The centre of government needs to review its ability to understand and challenge these management decisions. There is also a lack of a structured approach to delivering the staff cost reduction required across government in the next Spending Review period.
“If these areas of weakness are not dealt with, real risks to value for money remain.”
The majority of English local au- thorities are freezing council tax this year because of a £650m Government incentive fund to ‘compensate’ them, according to a survey.
The annual council tax survey from the Chartered Institute of Public Finance and Accountancy (CIPFA) shows that the average Band D English council tax bill is expected to be £1,438.87, a marginal reduc- tion of 35p on last year.
Most councils are freezing or cut- ting council tax, although “a hand- ful” have confirmed increases to cover town and parish precepts. CIPFA says that with the tax freez- es and government allocations of
9.9% on average taken into ac- count, the average reduction to councils’ overall budgets is 5.5% compared to last year.
Its analysis shows that a signifi- cant proportion of budget reduc- tions are being directed towards ‘back-office’ activities, with two- thirds of councils planning cuts of between 5% and 20% to finance, human resources and informa- tion technology departments’ budgets.
Cuts of more than 10% are report- ed for a range of services, includ- ing libraries, leisure and economic development.
Steve Freer, chief executive of CIPFA, said: “Councils have responded positively to the Government’s offer of funding to enable council tax freezes.
“The Government and councils have a shared interest in avoiding a public relations disaster of local people paying more for reduced services.
“Public attention is likely to contin- ue to focus on the service and job cuts which councils determine in order to balance their budgets.”
Margaret Hodge, who chairs the parliamentary public accounts committee, said it was “remark- able” that most of the extra cost came from an increase in manage- ment posts while lower-paid jobs were being culled.
She added: “It is just not accept- able for management layers and bureaucracy to build up with no- body in government controlling what was happening.”
Cabinet Office minister Francis Maude said the Government had taken “quick action” to get to grips with civil service pay and staffing levels, and was protecting impor- tant frontline services but cutting costs at the centre.
The spending watchdog also noted the amount of ‘grade creep’ occur- ring in the civil service, where high- er-grade staff were doing work ear- lier taken on by the lower grades.
public sector executive Mar/Apr 11 | 11
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