The government will introduce new primary legislation to implement tax increment financing (TIF), allowing local authorities to kick start developments by borrowing against future business rate increases.

As part of a white paper on local growth, published today, the government said it had started a review to decide how the TIF model should be implemented. Local authorities have until the 1 December to make their views heard.

The white paper says legislation is needed to introduce TIFs and that the government would encourage local authorities to make bids in order to be allowed to use the forward-funding mechanism.

Last month, deputy prime minister Nick Clegg surprised the property industry by revealing that the government planned to introduce TIFs as part of a package of measures designed to stimulate the economy.

Lobbyists such as the British Property Federation have long been calling for the introduction of TIF powers, which are widely employed in the US.

The government also said it wanted to consult councils on devolving more control over finances to local authorities. This could include allowing local authorities to hold on to business rates, instead of giving them back to the Treasury.

As part of today’s announcement, the government also said that elected mayors would be introduced in England’s 12 biggest cities.

• Scotland leads way in tax increment finance
• “Don’t delay” over TIFs, Birmingham chief warns government
• Government approves 24 local enterprise partnerships
• Government tells councils to set up local enterprise partnerships
• Clegg: Councils to get TIF powers in spending review