Beyond big banks and big government: Strategies for local authorities to promote investment

IPPR North, business and industry, finance, local government, regional issues

Download full publication

Author(s):  Ed Cox, Katie Schmuecker
Published date:  25 Mar 2013
Price:  FREE

This report explores the greater role that local authorities can and should play in stimulating investment and economic growth in their areas, and sets out recommendations for models of capital investment which could deliver much-needed returns for the North and other regions.

Little attention has recently been paid to the capacity of local governments to stimulate economic growth and facilitate lending to enterprises in their areas, despite copious debate over how banks and the central state should act in these respects. However there are established and emerging finance options available to local authorities which could more effectively deliver investment in infrastructure and housing, and provide much-needed finance to small and medium-sized businesses.

This paper focuses on how these opportunities – including different forms of tax increment financing, attracting capital from sovereign wealth funds, longer-term investment from local and foreign pension funds, and variations on a 'northern bank' – could benefit the north of England in particular. The authors diagnose the UK’s current problems with investment and regional fiscal autonomy, and explore case studies of successful financial tools used by local authorities, both in Britain and internationally, to support economic growth.

Finally, a set of recommendations are laid out for how the UK could develop frameworks for public and private capital investment which will meet the infrastructure, housing and development needs of the North and other parts of the country:

  1. local authorities should make greater use of municipal bonds to enable investment at scale, and on-lending for smaller projects in their areas
  2. a northern investment vehicle, capitalised by pension fund investment, should be created to raise finance for housing and other northern infrastructure projects
  3. a well-resourced British investment bank should be formed with a clear regional allocation of funds to provide for a northern investment capacity with its own strategic funding priorities.

 

ERDF Logo Portrait Colour JPEG

 
 

Our people

Ed Cox, Director, IPPR North

 

In the news

Minister joins calls for North-East regional bank
The Northern Echo - 07 Jun 2013

NEvolution campaign gathers momentum
The Northern Echo - 04 Jun 2013

IPPR calls for Northern councils’ bond issue
Public Finance - 26 Mar 2013

Local government 'has vital role in stimulating investment'
Local Government Executive - 26 Mar 2013