LGA calls for ‘Budget for local bonds’

12 Mar 12

Councils have called on the chancellor to use next week’s Budget to make it easier for them to issue bonds to pay for vital infrastructure.

 By Richard Johnstone | 12 March 2012

Councils have called on the chancellor to use next week’s Budget to make it easier for them to issue bonds to pay for vital infrastructure.

The Local Government Association wants George Osborne to remove barriers to bonds, such as tax regulations that discourage foreign investors from purchasing them. Its Budget submission also urges the government to ease restrictions on councils pooling funds.

The LGA is currently examining plans for a collective municipal bonds agency, which would borrow from the market and then lend to town halls as required.

Alongside this, a number of councils have been given credit ratings in the last year.

LGA chair Sir Merrick Cockell said that changes to regulations could unlock private investment, including a proportion of the £140bn held by UK pension schemes, to plug the funding gap created by government spending cuts.

He added: ‘Government has taken some steps towards giving councils the tools they need to get local economies growing. But the cuts to local authority budgets mean it is now more important than ever for the Treasury to give councils the financial autonomy they need to create jobs and bring growth to the economy.

‘Councils have it within their potential to instigate a virtuous circle of economic growth where private investment pays for new roads, bridges and buildings to bolster the economy, which in turn create the new jobs and skills we need to keep it growing in the long term.

The LGA is also calling for the government to speed up its proposed ‘city deals’, which give councils greater local control over economic development powers such as transport and training.

One deal has been agreed with Liverpool, with the city set to vote for an elected mayor in May. The new post will include local powers over welfare reform in the city, with plans to extend the Work Programme to include qualifications in a 'youth contract'.

Announcing Liverpool’s deal in February, Deputy Prime Minister Nick Clegg said that he was looking forward to more city agreements being reached across the country ‘in the coming months’.

The LGA has said that these should be extended, as council control of skills development would help boost economies.

The British Chambers of Commerce business group also published its Budget submission today.

It called for Osborne to stick to the government’s deficit reduction plans. However, it has also called on him to scrap the planned 5.6% increase in business rates from April.

Director general John Longworth said: ‘Without a strong and prosperous private sector, we will be unable to provide the public services we all want or need. The chancellor must stick to Plan A, but use the wiggle room he has to scrap the 5.6% business rate rise that will cripple many businesses.’



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