New Localis report an ‘excellent contribution to the debate’ says Pickles
Author: Localis |
Local government think-tank, Localis, in partnership with Lloyds Banking Group, have today launched a major report on mechanisms for funding the construction of new local infrastructure which will provide the transport, energy and communication networks the country needs in the coming years.
Commenting on ‘Credit Where Credit’s Due’ Secretary of State for Communities and Local Government Rt. Hon. Eric Pickles MP, who also spoke at the launch of the report, said:
“This report is an excellent contribution to the debate on this crucial issue.”
He added:
“We’ve made huge strides putting people back in charge of their own economies, removing barriers that blocked local ambition and creating incentives to grow.
“Local enterprise partnerships have brought local business and civic leaders together to drive growth backed up by our New Homes Bonus, Regional Growth, Growing Places and Get Britain Building funds, as well as 24 Enterprise Zones, that are helping to create the new businesses and jobs people need.
“In addition reforming business rates so councils can keep their own income and use tax increment financing to fund infrastructure will guarantee communities feel real benefits from economic expansion too.
“Pushing power and resources away from Whitehall is creating the conditions that will lead to a sustained and balanced economic recovery across the country.”
‘Credit Where Credit’s Due’ key recommendations are:
The report’s principal recommendation is for the government to create and help capitalise a new £30 billion National Infrastructure Bank (NIB). The new NIB would:
Spread risk for investors by investing in a wide range of projects
Lend to private and public organisations to fund the construction of new infrastructure (e.g. bridges, roads, broadband, and local power stations)
Invest directly in infrastructure projects
Guarantee other banks’ loans to fund infrastructure
The report suggests that the NIB could be capitalised over a four year period, without increasing the deficit. Instead, funding would come from:
Around a sixth of the monies as part of the new £50bn round of Quantitative Easing (c.£8bn)
8.5% of funds held within the 101 local government pension schemes (c.£12bn)
0.5% of UK private pension funds (c.£10bn)
At present, it is estimated that less than 1% of the c.£2bn assets held within UK pension funds are invested in domestic infrastructure, and our report argues that a NIB could help unlock greater investment from both public and private funds.
The report has a number of other recommendations to help promote infrastructure investment including suggesting that Local Enterprise Partnerships (LEPs) should be given a range of new powers. The report contends that LEPs should:
Offer a (non-mandatory) receipt pooling function for business rate and Community Infrastructure Levy monies
Each contain an Enterprise Zone, with bids to Government for new zones to be created by April 2014
Be allocated by government a further Enterprise Zone each LEP could “auction” to the private sector, providing upfront monies for infrastructure projects that would stimulate job creation
Finally, the report argues for greater collaboration between councils at the sub-LEP level, including cross-authority pooling of money between individual authorities for infrastructure projects of cross-boundary significance, and Business Improvement Districts should be encouraged to span authority boundaries by amending existing legislation.
Alex Thomson, Chief Executive of Localis said:
“We need to get Britain’s economy growing again. We believe that a bottom-up approach is the best way of catalysing such growth, and we are confident that the recommendations in our report would enable both more, and better-targeted, investment in the local infrastructure we need.”
Gershon Cohen, CEO Infrastructure Funds, Lloyds Bank Wholesale Banking and Markets, said:
“Investment in infrastructure is of critical importance to the UK’s future growth and prosperity, which is why we felt it was so important to support this in-depth review. We have a longstanding and strong commitment to providing financial support for infrastructure projects and were a National Infrastructure Bank to be set up it would be hoped that this would complement existing sources of funding, and help facilitate access to the capital markets.”
Support for ‘Credit Where Credit’s Due’ has come from a range of cross-party figures across central and local government:
Jesse Norman MP, Member of the Treasury Select Committee and author of the report’s foreword, said:
“This report’s conclusions are of direct relevance for central government and local authorities of all political persuasions. It is pragmatic, comprehensive and clear. It persuasively argues for the need to think differently; to embrace new funding mechanisms; to be bold and entrepreneurial in the public service. It deserves to be widely read, and carefully considered.”
Lord Robert Skidelsky, Crossbench Peer and economic commentator, said:
“Britain’s dilemma is that its economy craves investment but its politics mandates fiscal retrenchment. With this report, Localis has produced concrete suggestions to break the bind. In particular, it skilfully highlights the great promise of establishing a national investment bank. By leveraging a limited pool of public capital in the private market we can satisfy both our economy and our politics. This is a valuable and timely contribution to the debate on economic recovery.”
Lord John Shipley, Liberal Democrat Peer and Government Cities Adviser, 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. This report, brimming with interesting ideas, should be read by all those interested in building a stronger and more balanced economy, and I welcome its entry into the wider public debate.”
Cllr Sir Richard Leese, Labour Party Leader of Manchester City Council, Vice-Chair of the Greater Manchester Combined Authority, and LGiU’s C’llr Achievement Awards local government leader of the year (2012) said:
“Local government needs to be ever more inventive to find the infrastructure finance necessary to boost local economies. This report is a timely and comprehensive contribution to addressing a vital national issue.”
Cllr Ravi Govindia, Conservative Leader, 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. This excellent report succinctly describes the variety of funding sources that can empower local government to achieve this goal, and highlights where further progress is necessary.”
‘Credit Where Credit’s Due’ was launched today at Localis’ offices in Westminter. Speakers at the launch included: Secretary of State for Communities and Local Government Rt. Hon. Eric Pickles MP, Lord Shipley, Cllr Paul Carter, Leader of Kent County Council, and Gershon Cohen, CEO Infrastructure Funds, Lloyds Bank Wholesale Banking and Markets.
A video of the launch will be available to watch on Localis’ website.
‘Credit Where Credit’s Due: Investing in local infrastructure to get Britain growing’ is available for free download from Localis’ website.
ENDS