- a LEP has to be about new business and not displacement and relocation of businesses – as the National Builders Federation website puts it: ”Zones should not be displacing economic activity from one part of an LEP to another”;
- local councils will be allowed to retain their business rate, making it easier for local councils to ‘borrow’ against future income from these business rates.
Mr Clancy only gives half a cheer for the latter, because borrowing against a future income stream in business rates has been limited to infrastructure projects.
He recommends building and investing in businesses first and then responding to infrastructure needs flowing from that.
“We don’t need one instrument, Mr Pickles, we need an entire orchestra.”
Clancy noted that the chapter ‘Supporting local economic growth through new instruments’ failed to offer the range of financial options needed to buy equity in Birmingham businesses and build infrastructure.
In particular, these would include municipal bonds, which are “part of the standard instrumental and investment furniture the world over“.
Confident acts of economic self-determination
Clancy adds: “The Brummie Bond for the Brummie LEP, perhaps? . . . These are the instruments which could empower local councils and LEPs. Confident acts of economic self-determination are what are needed. The UK banking system is an old life and an old civilisation – which, I suspect, will implode pretty soon anyway.”
So, invest local wealth locally
Who would buy the bonds? Individuals, companies and UK Pension funds. The investment of trillion pounds or so of UK Pension fund assets – mainly public sector – in municipal bonds is Clancy’s starting point. Instead of moving these funds abroad he rightly advocates ”local sourcing of local wealth to invest in regional business and infrastructure.”
* John Clancy is a Birmingham City Councillor in the Quinton ward–