Birmingham City Council leader John Clancy urged the government to provide additional fiscal freedoms to cities, including powers to issue bonds, to help create regional wealth funds that could boost economic investment.
He was responding to press reports that the Treasury was considering new schemes to get pension funds investing in building projects, ahead of the Autumn Statement on 23 November.
According to The Sunday Telegraph, energy, transport and broadband schemes were among the areas in which ministers were looking for pension funds to boost investment.
It also reported that regional mayors could be given powers to issue up to £1bn in “city bonds” underwritten by the Treasury, to fund projects.
Clancy said he had long argued that local government, particularly in the West Midlands, needed to be more innovative and creative about using their assets, and there was interest in the Treasury about how to catalyse investment.
Many local authorities have been considering bond issuances, including through the UK Municipal Bonds Agency, which has been in development by the Local Government Association for more than three years, and has declared itself open for business.
Clancy said that confirmation of government backing for council bonds “could be the catalyst for an entire market”, with bonds forming part of a vehicle to get pension funds, particularly local authority schemes, to invest in the UK.
“I’ve suggested a way of linking investment directly to positive assets in the city: housing, other infrastructure, and long-term venture capital investment in our own people in small and medium-sized businesses across the city,” he said. “An access-all-areas investment, not just for big commerce in the city centre but across all of our local centres delivering an inclusive economy that works for all. In particular, I have suggested rewiring pension fund investment into these bonds.”
This was not about borrowing to spend but rather “rewiring and using our assets cleverly to make sure we use our wealth in our cities and regions to supercharge investment”, he added. It was a chance to bring together the publicly-owned assets across the full range of public bodies across the West Midlands region, which as well as councils would include health, environment and education, with local government pension funds and private sector wealth.
“This triangle of wealth and opportunity should not be seen as some sideshow in a combined authority: it should be its engine,” he stated.
“So I welcome today's reports. It is time to be more radical. It is time for cities and city regions to take even more of a leading role in the post-Brexit economy. Cities – especially Birmingham – can lead the way.”
