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Pressure is growing for local authorities to be enabled to raise cash for vital infrastructure from bonds schemes to attract investors. With demand for new schools rising and continuing funding pressures such as pothole repairs, the LGA this week called for US-style public bond issues will help ensure vital infrastructure are not left to crumble because of public spending cuts. Local people would be able to invest in local projects with a guaranteed rate of return that would beat poor returns from high street banks and drive up community involvement. Household savings in bank accounts are currently worth £68bn. Another option for councils to be able to invest cash from the local government pension schemes to avoid the need to seek high-risk investments such as the Icelandic banks. Pension funds could also be lured in by the prospect of a safe return on their investment. Caroline Green, LGA senior policy consultant, told The MJ: ‘The days of chasing fast returns are not the same as they were. Individuals will get a return that benefits their communities.' Alternative funding is an issue being examined by groups in London, such as the Thames Gateway London Partnership and Kent CC for major infrastructure projects. Michele Dix, managing director of planning at Transport for London, said initiatives such as bonds or pension funds had to be an option: ‘The increase in London's population is not going to stop. We need to look at how we get private funding. There are things we will need to work up in more detail and get pilots going.' The Treasury is interested in the idea but the two stumbling blocks are that it would still be a part of the UK borrowing sheet and no single political figure is championing the idea at government level. However the idea was originally floated in the pre-election Conservative Party policy document Control Shift. Caroline Green said: ‘If we don't do this we are going to store up future costs in the system like around issues like climate change.'

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WHITEHALL

Bonds a licence to build, says LGA

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