The project has the potential to unlock £660 million of private investment and create up to 4,900 jobs.
Finance Secretary John Swinney has backed the City of Edinburgh Council's proposal to use Tax Incremental Financing (TIF) in the development of a new cruise liner terminal, lock gates, esplanade and link road.
The Scottish Futures Trust (SFT) has developed TIF for use in Scotland and is working with a number of local authorities to develop pilot projects. The scheme in Edinburgh is the most advanced and will be the first time TIF - which involves borrowing the money needed to finance key infrastructure against future increases in business rates income in an area - has ever been used in the UK.
In a speech to the Scottish Futures Trust (SFT) conference in Edinburgh, Mr Swinney revealed that a business case for the scheme had been provisionally approved by the Government. SFT, whose role includes developing and providing guidance on innovative funding mechanisms such as TIF, has worked closely with the city council to develop the business case.
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Mr Swinney said: "This is another significant step forward for SFT. In its first full year, SFT achieved £111 million of net benefits and savings as it built up its capacity and portfolio of projects - well within the 100 to £150 million target we anticipated. Just last week we announced that the National Housing Trust, spearheaded by the SFT and Scottish Government, will provide 1,000 new homes for rent across Scotland and safeguard around 1,000 construction sector jobs.
"We expect SFT to become an increasingly valuable asset in dealing with the challenges which lie ahead."
Councillor Jenny Dawe, Leader of City of Edinburgh Council, added: "Attracting new investment is critical to the city's future and I warmly welcome the Scottish Government's support. We produced a clear and compelling business case for the use of TIF to help transform Edinburgh's Waterfront into a more attractive area for living, working and leisure. Our aim is to kick-start growth, which will protect and create jobs now rather than waiting until the economy recovers. As well as being an innovative step, this shows we are being proactive and looking out for Edinburgh's long-term success. This is crucial for the country as a whole, because when the capital performs well it benefits all of Scotland."
The Cabinet Secretary also announced the appointment of Sir Angus Grossart as SFT Chairman for a further three years, following an open and transparent appointment round. Since his appointment as interim Chairman in 2008 Sir Angus has overseen the development of SFT into an organisation which currently leads on or supports a portfolio of projects worth £7.3 billion.
(GK)
