Local authorities in England and Wales are watching Scotland with envy. Thanks to devolution, Edinburgh is leading the race to create the UK’s first tax-increment financing (TIF) scheme, and two other Scottish councils — Glasgow and North Lanarkshire — are just behind. In England and Wales 80 councils want to follow, but politics is getting in the way.

Today, Edinburgh was due to submit its TIF business case for the Edinburgh Waterfront scheme to the Scottish government’s infrastructure investment arm, the Scottish Futures Trust.

The go-ahead is expected in May. In three weeks, Transport for London will publish a paper saying why its £600m Northern Line extension should be the first TIF in England. But progress here is unlikely before the general election in May.

TIFs have been used in the US since the 1950s to allow councils to fund infrastructure by borrowing against the future tax revenues from a scheme (see diagram). Scottish local authorities are able to use these rate increases for their own purposes. Elsewhere in the UK, that money is taken by the Treasury and reallocated to councils, so it is impossible for them to guarantee funds in advance.

The government set up a group 12 months ago with officials from the Treasury, Communities and Local Government, the British Property Federation, the Core Cities Group and others to report on TIFs. The government says it would need to change the Local Government Act 2003.

Chris Murray, director of the Core Cities Group, which represents UK cities outside London, sits on the panel and says progress is slow. “It’s ironic,” he says. “It’s a proposal developed by the core cities [Birmingham, Manchester, Leeds and Sheffield], but we’re not able to do it and Scotland is. Good progress was made last year, but the political hiatus before the election is interfering now.”

A spokesman for Communities and Local Government says it is in touch with the Scottish Executive and “keeping a close eye” on TIF progress.

Murray believes England and Wales can pilot TIFs without changing the law. Others agree.

“The problem is not so much the legality, it is the political will,” says Anthony Gill, projects director at Grosvenor.

Neil Partlett, senior director of regeneration and development at CB Richard Ellis says in Scotland TIFs have been slow to germinate. England looks set for a similar wait.

• Scotland approves tax support for Edinburgh Waterfront
• Government to legislate for tax increment finance
• Scotland consults over planning reforms
• Call for Scotland to centralise property management
• Budget 2010: Government to launch TIF pilots