Town halls ‘must plan’ infrastructure finance
Councils should start preparing the ground for the next Spending Review and not ‘sit back waiting for ready-made solutions’ to drive local economic growth, communities secretary Eric Pickles has warned.
Speaking at the launch of a Localis think-tank report on infrastructure funding, the communities secretary stressed the coalition’s prime goal of deficit reduction would continue to shape spending and borrowing powers.
Mr Pickles added: ‘The new spending period should be used to renegotiate the size of that [funding] envelope to ensure there is enough headroom in order to create tax increment finance and other functions.’
‘I would expect a much more grown up relationship between local authorities and central government in arriving at the final sum,’ said Mr Pickles, who endorsed the paper’s call for a renewal of the UK’s infrastructure.
A central recommendation of the study, jointly published with Lloyds Banking Group, calls for government help in establishing a 30bn National Infrastructure Bank (NIB) ? along similar lines to one set up by President Obama in the US last November.
To help capitalise the bank, the authors suggest the Local Government Pension Scheme (LGPS) should, over four years, provide 12bn directly and through bond issues. They suggest the remainder should comprise 8bn from the latest round of quantitative easing and 10bn from private pension funds.
The study proposes that the 39 local enterprise partnerships (LEPs) should be given an enterprise zone and allowed to create, through an auction, an additional zone to fund the initial costs of job-creating infrastructure schemes. Other recommendations call for LEPs to receive new powers to pool rates. At sub-LEP level, councils are urged to pool funds between themselves to fund infrastructure projects.
Alex Thomson, chief executive of Localis said the recommendations would ‘enable both more, and better-targeted investment in the local infrastructure we need’.