Council pension schemes ‘should fund infrastructure bank’
Author: Richard Johnstone, Public Finance |
Funds from local government pension schemes should be used to help set up a 30bn national infrastructure bank, a local government think-tank said today.
Localis says the bank would drive economic growth by providing funds to both the public and private sectors to pay for local infrastructure such as bridges, roads and broadband connections.
Funding for the bank would comprise 12bn from local government pension schemes, 10bn from private schemes and 8bn from the Bank of England’s quantitative easing programme, according to the think-tank.
Its report, Credit where credit’s due, produced in partnership with Lloyds Banking Group, says the bank could unlock pension fund cash by spreading the risk of financing schemes across investments in a wide range of projects.
The report follows Chancellor George Osborne’s announcement last year that negotiations were under way to access public and private pension funds for infrastructure.
Localis chief executive Alex Thomson said a ‘bottom-up approach’ ? allowing local authorities to plan and borrow for their own infrastructure ? was the best way to catalyse economic growth.
‘We are confident that the recommendations in our report would enable both more, and better-targeted, investment in the local infrastructure we need,’ he added.
Other recommendations in the report propose expanding the functions of Local Enterprise Partnerships, including giving them a new role when councils take control of business rates in April 2013.
LEPs should encourage member authorities to pool business rates, and central government should provide additional funding as an incentive.Authorities that are not part of a LEP should also consider pooling the funds to pay for cross-boundary infrastructure projects.
Local government figures have welcomed the report. Sir Richard Leese, the leader of Manchester City Council, said he proposals could give local government the finance needed to boost local economies.
Ravi Govindia, leader of the London Borough of Wandsworth, said: ‘Councils have an increasingly important role to play in stimulating the economic growth the country needs and in delivering the infrastructure their localities require.’
The report highlights areas where more is needed from government, he added.
Lord John Shipley, the Liberal Democrat peer and adviser to the government on cities, said: ‘The coalition government is rightly shifting power and money from Whitehall to local authorities and Local Enterprise Partnerships across the country.
‘Giving cities, counties and LEPs greater potential to shape their localities can help drive a new wave of infrastructure investment, create growth and jobs, and fundamentally reorient our economy for the better.’