Glasgow Chamber Of Commerce

We welcome the announcement from the Scottish Government which gives approval to Glasgow City Council's application to use Tax Increment Financing (TIF) in support of the expansion of Buchanan Galleries by the Buchanan Partnership.

Glasgow Chamber of Commerce acknowledges that this is a project that is not without controversy, recognising that it reflects the experimental role of TIFs and the likely impact of such a large investment on a substantial stretch of the city centre.

The Buchanan Galleries TIF has obvious parallels with the city's International Financial Services District (IFSD), in which fresh office buildings on the Broomielaw were built by the private sector.

These shiny new blocks - which are highly relevant to the demands of companies both local and national with big floorplates, appropriate telecoms and all the other pre-requisites of a modern office - have played their role in attracting inward investment that has brought 15,000 new jobs to the city.

Notably the IFSD was supported by public sector investment, and left us with older central business district offices that we need to recycle as they no longer fit demands.

We're supporting the TIF announcement firstly because we believe that it helps to keep the Glasgow retail offer, which we're pleased to say is still number two in the UK after London's West End, fresh and modern alongside the marvellous new investment at the St Enoch Centre.

Secondly it is a very significant private investment - over £350m of private investment with the accompanying construction and jobs. There is precious little of these in the current circumstances , and this is a significant long-term vote of confidence in Glasgow's city centre.

Thirdly, the TIF component will allow funding to be released by the Council to invest in the continued upgrading of Glasgow's public realm.

We have seen the positive effects of the high-quality public realm investment in the Merchant City and the IFSD, and the TIF means that we are now in a position to realise more of these.

We will have substantial investment in the area of Queen Street Station - and it's worth noting how poor the entrances into the city are from that station, and the repaired bridge at Cathedral Street that will allow it to re-open to traffic allowing options for reducing traffic in George Square, allowing the Square's refurbishment and improvement as a civic space to meet the requirements of both residents and overseas visitors.

Clearly there are conditions that the Scottish Government has placed on this announcement, largely related to displacement and the impact that this will have on other part of the city centre retail offer.

We will happily work with the Government and the City Council to ensure ongoing development of the strategy for the city centre, designing and delivering the heart of Glasgow for the future.

We will actively participate in developing that strategy, helping businesses - many of whom will have investments that could be affected by the TIF plans - to make their views known.

But the bottom line is that the Buchanan Galleries TIF is a major jobs generator and this announcement reinforces the long-term role of the regional centre for retail for decades to come.

• TAGGED Tagged: , TIF

One of the recommendations of the Glasgow Economic Commission's report is that the city should be as proactive as possible in exploiting a range of innovative funding mechanisms.

Tax Increment Financing (TIF) is mentioned as one of those and is included within the Government's list of mechanisms promoted by the Scottish Futures Trust(SFT). We vigorously support the Government's desire to see TIFs across Scotland.

Currently the SFT has approved two TIFs - one in Edinburgh Waterfront, one at Ravenscraig.

A third, in Glasgow city centre at Buchanan Galleries was today (Thursday October 27) approved by the City Council's executive committee, and the business case will now be sent to the SFT. We are pleased that Glasgow is actively engaged in what has become a competitive race to secure Tax Increment Financing for the city.

Why do we like the Government's policy to promote TIFs so much?

TIFs are essentially mechanisms for recycling buoyancy in rates back into the city. So for every completed project that has a TIF, the growth of the rates associated with that project gets recycled back into the local authority's coffers.

The city then borrows money on the back of that income stream in order to invest in the local public infrastructure.

The example of the Buchanan Galleries shows the kind of investment that can be involved - a refurbishment of the public realm around Queen Street Station and a dramatic improvement in the gateway experience for visitors travelling from the east into the city, a new home for the Royal Scottish National Orchestra at the Concert Hall, repairs- at last - to the bridge at Cathedral Street which has kept that street closed to all but buses for many years, and an opportunity properly to refurbish George Square as the city's premier civic space to give it a world class quality that many would argue it hasn't quite captured yet. 

These are the kinds of investments that it is increasingly difficult to find public resources to fund but which are an essential part of the improvements we need for a competitive, modern city centre. Businesses from retail, leisure, commercial office development and education are constantly advising us on the importance we must place on protecting and growing the city centre. It matters to the whole business community that it functions effectively. 

We also like the Government's TIF policy because it reconnects local authorities' financing structures with the needs of business and gives them the incentive to invest behind business growth - something which has had to be an act of faith on the part of good local authorities since the introduction of the centralised pooling of business rates.

The individual merits of any one TIF are for negotiation between the local authority and the Scottish Futures Trust, and subsequently ultimately with the Government. We acknowledge that there will always be a strenuous debate to go through for investments like these - just as we see daily in the long term plans for exploiting renewable energy.

My concern at present is that we're at risk of exacerbating the debate by being too cautious in the introduction of TIFs at a time when we have a desperate need to encourage new funding sources.

As we understand it, the SFT has essentially advised local authorities that they are operating TIFs as a pilot project. As a consequence there will only be a limited number of these and effectively a handful of local authorities may only get one shot at it.

If this approach was modified, I'm aware of at least three projects which could benefit from TIF in Glasgow which might release development funding at a time when we really need it.

It's not as if TIFs are a wholly experimental mechanism, as they have been used for decades in the USA, where they have now become a main tool in economic development.

As a consequence, in our discussions with Ministers and MSPs, we'll be asking for some thought about lifting these limits on TIFs since they can encourage additional investment without actually adding anything to the Scottish budget.

They are capable of delivering much-needed infrastructure investments in public realm, transport, land recycling, and in all various aspects of utilities - investment that will be increasingly difficult to fund through traditional public sector routes.

Very much a win-win situation.

• TAGGED Tagged: , TIF