The government plans to introduce a bill next July that will allow local authorities to fund regeneration by borrowing against future business rate rises, using tax increment financing (TIF).

The Department for Communities and Local Government has today published a business plan setting out its policy objectives and its deadlines for meeting them.

As part of the plan, it says it will introduce TIF powers and the retention of business rates locally by April 2012, through a bill which is due next July.

This is the first time the government has set out a clear timetable for legislating to allow TIFs, a financing model that the property industry has been demanding for decades.

Areas that could benefit early from the model include south London, where Wandsworth Borough Council wants to use TIF to extend the Northern tube line to Nine Elms.

The document, released by prime minister David Cameron’s office, is part of a wider government bid to make departments more accountable and less politically fickle.

The communities department also said the first referenda on introducing 12 elected mayors to the UK’s biggest cities would take place in May 2012.

It will help local authorities to form local enterprise  partnerships to replace regional development agencies, including those which failed to get approval when the first 24  local enterprise partnerships (LEPs) were announced last month. A deadline of October 2011 has been set for the last of the LEPs to be confirmed

Details of how TIF will be implemented are yet to be clarified. The government must make decisions about whether all local authorities will be allowed to use the model, and if not, which TIFs will get the green light.

Cameron said: “Instead of bureaucratic accountability to the government machine, these business plans bring in a new system of democratic accountability – accountability to the people.

“So reform will be driven not by the short-term political calculations of the government, but by the consistent, long-term pressure of what people want and choose in their public services – and that is the horizon shift we need.”

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