16 September 2010
By Mark Smulian
An investment of £50bn a year was needed to maintain transport, housing, energy, water and communications infrastructure, it added.
LGA chair Baroness Margaret Eaton said: ‘Despite the extremely tough financial climate we need to avoid storing up big bills for the future.
‘Our proposals could allow councils to raise money prudently and sustainably.’
The report, Funding and planning for infrastructure, called for a tax exemption for investors in municipal bonds raised to provide infrastructure. The Treasury would not lose money since the infrastructure created would increase economic growth, the LGA argued.
Bonds are permitted but rarely used, since they are more costly for councils than borrowing from the government.
But, with cuts likely to limit that source, report author Caroline Green said: ‘We want to reinvigorate municipal bonds to as a source of local investment.’
The LGA reiterated its call for the return of local control over business rates. It also called for councils to be able to fund infrastructure from future increases in tax revenues arising from associated development.
Tony Travers, director of the Greater London Group at the London School of Economics, doubted the government would allow any innovation that added to its spending.
‘Any kind of spending that councils do on infrastructure, no matter how creative they have been, is likely to count as government spending and perhaps the LGA should be looking at a new campaign to have local government spending counted outside that,’ he said.
Matthew Lugg, vice-president of the Association of Directors of Environment, Economy, Planning and Transport, said: ‘Traditional sources of funding for infrastructure will no longer be available.’
He added that councils should be given greater freedom and flexibility
See cover feature 'Not so fast'
By Mark Smulian
Councils have called on the government to sweep away restrictions on their powers to raise infrastructure funds.
A Local Government Association report published on September 16 argued that mechanisms such as bonds could not easily be used without tax changes. It said councils needed wider freedoms to make effective use of their borrowing and tax-raising powers.An investment of £50bn a year was needed to maintain transport, housing, energy, water and communications infrastructure, it added.
LGA chair Baroness Margaret Eaton said: ‘Despite the extremely tough financial climate we need to avoid storing up big bills for the future.
‘Our proposals could allow councils to raise money prudently and sustainably.’
The report, Funding and planning for infrastructure, called for a tax exemption for investors in municipal bonds raised to provide infrastructure. The Treasury would not lose money since the infrastructure created would increase economic growth, the LGA argued.
Bonds are permitted but rarely used, since they are more costly for councils than borrowing from the government.
But, with cuts likely to limit that source, report author Caroline Green said: ‘We want to reinvigorate municipal bonds to as a source of local investment.’
The LGA reiterated its call for the return of local control over business rates. It also called for councils to be able to fund infrastructure from future increases in tax revenues arising from associated development.
Tony Travers, director of the Greater London Group at the London School of Economics, doubted the government would allow any innovation that added to its spending.
‘Any kind of spending that councils do on infrastructure, no matter how creative they have been, is likely to count as government spending and perhaps the LGA should be looking at a new campaign to have local government spending counted outside that,’ he said.
Matthew Lugg, vice-president of the Association of Directors of Environment, Economy, Planning and Transport, said: ‘Traditional sources of funding for infrastructure will no longer be available.’
He added that councils should be given greater freedom and flexibility
See cover feature 'Not so fast'
