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Under the prudential system local authorities are able to borrow for capital projects without Government consent, provided that they can afford the borrowing costs. Authorities are free to choose the source of these loans, and may borrow, should they wish to do so, by issuing bonds.
Also the Local Government Resource Review is considering how, in the context of changes to the business rate system, Tax Increment Financing can be introduced. Tax Increment Financing enables borrowing against future increases in business rate receipts to help fund the development of infrastructure.