Finance Secretary John Swinney has provisionally backed North Lanarkshire Council's proposal to use Tax Incremental Financing (TIF) in the second phase of Ravenscraig's redevelopment, which will includes road upgrades and infrastructure works that will lead to the creation of a new town centre.
The project has the potential to unlock an additional £425 million of private investment and create up to 4,500 new jobs - including 500 in the construction sector.
The Scottish Futures Trust (SFT) has developed TIF for use in Scotland and has been working with a number of local authorities to develop pilot projects. TIF involves borrowing money from the Public Works Loan Board to finance key infrastructure projects against future increases in business rates income in the area resulting from new development.
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In September last year Mr Swinney provisionally approved a business case to use TIF in the £84 million upgrade of Edinburgh's waterfront. As well as announcing provisional support for Ravenscraig, the Government has today confirmed that the Edinburgh TIF scheme has now been formally agreed by Ministers and the Council.
Mr Swinney said: "Massive cuts to the Scottish Budget imposed on us by Westminster have underlined the importance of finding new, cost-effective funding models which crucial infrastructure projects such as the Edinburgh Waterfront and Ravenscraig regeneration, enabling us to unlock economic development, whilst ensuring maximum value for the public purse.
"The Ravenscraig regeneration scheme is vitally important to the future of the North Lanarkshire and wider Scottish economy. The council and SFT have presented a convincing business case for the use of TIF in driving this pivotal project forward.
"Following the Edinburgh Waterfront TIF project, which has now been formally signed off, Ravenscraig is the second pilot project to be given the green light by Scottish Ministers. It demonstrates that greater collaboration across the public sector, working with the SFT, can achieve positive results.
"It also highlights the increasing importance of SFT to public finances in Scotland. In its first full year SFT delivered some £111 million of net benefits and savings - well within our expectation of benefits in the region of £100-150 million. And in 2011/12 SFT will work on capital projects valued at £9 billion, helping to sustain economic recovery and stimulate construction."
(GK/KMcA)
