Chancellor George Osborne today said that the government would implement “massive devolution of financial control” to local authorities, including the tax increment financing (TIF) model for funding infrastructure.

Speaking today in the House of Commons, Osborne said that he would make savings of 7.1% to council funding but that in return, he would give local authorities more power over how they spend the money.

He said that as part of the Comprehensive Spending Review, local authorities would have “ringfences” removed from their local government grants.

As part of this autonomy, councils would be given the right to finance “key” infrastructure projects in their areas through TIFs, meaning they can borrow money against future increases in business rates.

The move will be welcomed by the property industry, because it has the potential to allow councils to kickstart schemes that had been unviable during the downturn.

Osborne also said that his plans for local government spending would result in 150,000 new homes across the UK. As an antidote to the scrapping of regional housing targets, he said a New Homes Bonus would reward local authorities for every new home built.

More details on how TIFs and the New Homes Bonus will be implemented are due later this afternoon.

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