Councils must make private capital work harder for them, local government minister, John Healey, has claimed. Speaking at a conference in central London last week, Mr Healey also called on councils to use the powers they had to raise extra cash for their services and areas. According to Mr Healey, just 60% of councils were using prudential borrowing, and only one in five councils was using charging to its full potential. And, despite councils generating £1bn a year from powers to trade, only one-quarter of the councils which did trade aimed to make a profit. The minister warned delegates at the IPPR/LGA conference on the future of local government that private investment would be harder to come by as the market became more cautious under the global credit crunch. He called on councils to ‘experiment' with alternative funding tools. ‘We have to push for more improvements and innovation, especially in the contribution of equity and grant funding, and around prudential borrowing and better use of public assets,' he said. The minister also outlined his commitment to allowing local areas to keep some of the cash they generated, but he added: ‘The four local authorities with the richest business base will alone contribute one-eighth of the £20bn or so collected this year in non-domestic rate.' The conference also heard from Sir Michael Lyons, author of the Lyons review. One year on from his report, he said: ‘Capping is dishonest' He told delegates his solutions to problems surrounding the funding of local government were ‘never going to be a quick fix'. Instead, he suggested it was for future governments to take forward, but that the current government needed to ‘pave the way'.
