Could Brummie bonds fund house building?

john clancyCity councillor John Clancy, who once worked in the venture capital market, explains in a Chamberlain Files article,  [accessed via the Brummie], that  ‘Brummie bonds’ can provide much needed investment and kick-start building by local councils and housing associations across Birmingham.

Some readers will remember that the Brummie Bonds concept was incorporated in the 2003 People’s Pensions Proposal, informally presented to MPs, an MEP and NGOs by a London colleague Colin Hines (co-founder of Localise West Midlands) with co-authors, accountant Richard Murphy (now of Tax Justice fame) and MP Alan Simpson. Read on here.

In October 2004, David Bell’s article on the subject in the Post: Buy a share in Brum pointed out that bond issues are used to raise finance by federal states in Germany and many other local authorities around the world, but although English councils have powers to issue bonds none are believed to have used them.

John Clancy’s vision is of a 40-ward investment strategy. An access-all-areas Brummie Bond investment issue is needed and he records that the Labour Party’s policy announcement last weekend on the Future Homes Fund is effectively the revival of the concept of housing bonds itself:

  • Anyone saving for a house deposit can put it in an ISA to which the Government would contribute 20%. The Labour Party is proposing that those funds would be earmarked for new house building. The banks would be directed to invest these assets into housing bonds.
  • Local councils and housing associations would issue bonds into which the UK’s banks would be required to invest. This would keep investment by UK citizens in the UK and, effectively, into local and regional investment.
  • If local developers are sitting on a land bank where planning permission for housing is already given, then the “use it or lose it” principle would have to apply. If there is capital ready and willing to buy and build from housing bonds, then so be it. Positive, active creative capital will need to push out dormant, destructive, delayed capital.

There is now a growing consensus that investing in UK housing is the best investment strategy for the health and wealth of the funds. They provide healthy returns on a risk adjusted basis to the pension funds.

A recent analysis by TradeRisks.com recommends hard-nosed investors (especially pension funds) to go into social housing bonds rather than corporate bonds, and that now is the best time to do so. Sixteen of the biggest 60 Housing Associations have now issued own-name public housing bonds. It’s time for local councils to do the same.

Government has relaxed the rules on investment and recognised the key part that local government pension schemes have to play in regeneration, infrastructure and ‘green’ investments. Cllr Clancy says that if any local government pension fund has not laid out its 30% housing and infrastructure asset investment strategy, we should ask why it has not done so. He ends:

It’s time for Bonds: Brummie Bonds.

Let’s build.

Preston: building a new local economics

new start logoNew Start magazine, which champions urban regeneration that is inclusive, sustainable and socially just, has reported on the work of CLES (Centre for Local Economic Strategies) with Preston City Council. Innovative Quinton councillor John Clancy, who has been to Preston to meet councillors there at a CLES conference, has already tweeted the New Start article.

CLES is exploring how anchor institutions based in the city can bring benefits for the local economy and community.

Anchor institutions are those that – once established – tend not to move location, anchoring the local economy. They may be not-for-personal profit social enterprises, co-operatives, employee-owned and run companies,  or simply local firms with a determined loyalty to their community and workforce ‘family’ (some 2nd generation) – like Professional Polishing in 2007, which refused a highly profitable offshoring opportunity for this reason – resigning from BCC because of their promotion of these policies – and has gone from strength to strength.

cles logoThe starting point was ‘procurement spend’ – seeking to create a collective vision across institutions for undertaking procurement in a way which benefits the local economy. The supply chains of each of the anchor institutions (worth £750m pa) were analysed by CLES in order to identify particular sectors where there are gaps in expenditure in the local economy and where there is scope to influence that ‘spend’ in the future.

There were two broad objectives:

  • to analyse the extent to which anchor institutions already spend with suppliers based in the Preston and Lancashire economies and whether there is potential to repatriate some of that spend;
  • to identify whether there are any particular services used by anchor institutions which would lend themselves to future delivery by local worker-led co-operatives.

Analysing the procurement spend of six anchor institutions with their top 300 suppliers – some £750m – the research found that only 5% of their collective spend was with Preston organisations and 39% was spent with organisations based in Lancashire. £488m was effectively leaking out of Lancashire each year.

Preston skyline
Preston skyline

The findings of the supply chain analysis have prompted anchor institutions to ensure procurement spending reaps greater local economic and community reward. Local organisation Community Gateway, for instance, now asks suppliers to show the local economic multiplier effect of the delivery of its capital and maintenance projects.

Preston Council has identified local organisations in those sectors which could bid for and deliver those services in the future.

Lancashire Council has reframed its procurement practices so that there is greater emphasis on economic and social value.

Postscript: other initiatives

  • Living Wage – Preston City Council has been a Living Wage employer since 2009. It seeks to ensure other organisations across the public, commercial and social economies pay their own employees. The principle of the activity links to community wealth in that it seeks to provide a fair level of pay for Preston residents and also ensure the circulation of income within the local economy.
  • Move your Money – Preston City Council has become part of the Move your Money campaign. This seeks to encourage communities to bank in a more ethical way. The Council has also helped establish a new credit union (‘Guildmoney).

• Guild co-operative network – the council and its Social Forum supports worker led co-operatives and encourages other anchor institutions to utilise local co-operatives, most of which are engaged in front line provision.

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Future Governance for the West Midlands – a workshop: 24th March 2015

At the UNIVERSITY OF BIRMINGHAM

Please email to book a place.

 This workshop is organised by the Centre for Urban and Regional Studies at Birmingham University in conjunction with the Futures Network West Midlands and Localise West Midlands.

The workshop contributes to the debate about future patterns of governance in the UK and the pattern that best suits the West Midlands. Its focus is on how to shift power, strategic planning and decision making from central government and strengthen the role of local actors in decisions that affect social justice and the prosperity of people and places within the West Midlands.

Discussions about future patterns of governance in England have moved to the centre stage in recent months. But proposals have tended to be driven by developments in Scotland, London and Greater Manchester. In the West Midlands there is a stalled debate about combined authorities and one impression is that people and places within the region are not shaping the agenda. Is the West Midlands losing out and sleepwalking to new arrangements with insufficient thought and debate about what it needs rather than what others are doing?

This workshop opens up debate on these issues and considers:

  • What governance arrangements are needed by the region and different parts of it?
  • What arrangements engage with different sectors – public private and third sector?
  • What happens to the rest of the region if a combined authority emerges in the conurbation?
  • How will alternative arrangements work to strengthen local control and develop strategies that deliver social justice and benefits to different parts of the region?
  • What policies and strategies can benefit from different forms of cross boundary working?
  • How will resource allocation decisions be made and how can resources be raised in the regions for use in the regions?

Please email to book a place.

FUTURE GOVERNANCE FOR THE WEST MIDLANDS

A WORKSHOP MARCH 24 2015:

LECTURE ROOM 120 IN THE HILLS BUILDING

UNIVERSITY OF BIRMINGHAM

Programme

1.00 pm Registration

1.30     Introduction by the Chair (Prof Alan Murie, University of Birmingham)

1.40     The Devolution debate: an overview Chris Game, Institute of Local Government Studies, University of Birmingham

2.10       A Local perspective: issues, principles and objectives. Jon Morris (LWM)

2.35       Strategic Opportunities: issues, principles and objectives (FNWM Speaker).

3.00       Questions

3.20       Options for the West Midlands: Group Discussion (Tea and coffee available)

4.15      Next Steps: An agenda for action

Report back from discussion groups

Concluding remarks

5.00      Workshop ends

Please note – The Hills Building is R3 on the University campus map. This can be found at this map link.

Localise Birmingham? A lead from India

The sheer size of the city was brought home to the writer who accidentally travelled the 49’s circuitous bus route which crossed many city wards. With the exception of glossy Longbridge – a ‘revolution in regeneration’ – it was clear that there was a great deal to be done in several rather neglected and dismal wards, but that the indebted and over-stretched city council is fully occupied by city centre development.

 

A local blog’s August recommendation:

bvt logo

Combine Dr Dick Atkinson’s concept* of returning the city’s administration to its original villages with Localise West Midlands’ data in their full Mainstreaming Community Economic Development report.

atkinson urban village

Then enlist the highly experienced and successful Bournville Village Trust to oversee and guide the setting up of ten such village trusts. With appropriate capital and income – not just a Neighbourhood Community Budget – this would leave the council to co-ordinate services such as refuse collection and transport.

narendra modi (2)The Times of India reports that Prime Minister Narendra Modi has led the way by adopting one Indian village after initiating a village development campaign: “Saansad Adarsh Gram Yojana”.

In a pleasing example of cross-party co-operation – opposition leaders, Congress president Sonia Gandhi and vice-president Rahul Gandhi have followed suit . . .

devinder 6 ndtvThis has some relevance to the proposed urban villages – and Delhi’s Devinder Sharma adds to our designers’ preoccupation with aesthetics and logistics, the link with the ‘rural hinterland’:

“A smart village will not only bring internet connection into the rural hinterland but also provide support to sustainable agriculture practices. A smart village will automatically link local production with local procurement and local distribution”.

 

*Dick Atkinson: ‘The Common Sense of Community’ (Demos, White Dove Press, 1994 pp13-14)

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Has Secretary of State (Elizabeth Truss) visited the LWM site?

A Lancashire farmer sends news of a ministerial statement made by the new Secretary of State for Environment, Food and Rural Affairs, Elizabeth Truss.  On 21st July she launched “A Plan for Public Procurement of Food and Catering Services”, which includes an emphasis on Government procurement opening up the public sector market to small and local businesses:

truss plan local procurement“It will allow more locally-sourced food to be served in our public sector organisations, which means more money into the local economy. It is also good for the environment, as the approach supports UK farm production standards and measures to reduce food waste. It will encourage healthier eating, foster a great connection with food, and celebrate local food”.

LWM’s MCED report (links via Mainstreaming Community Economic Development) includes a section on public procurement – ‘Realising the potential of local economic power’, which refers to the consortium approach used in Italy which permits local SMEs and social enterprises to overcome minimum turnover requirements etc in order to bid for major contracts while retaining local identities and maximising local benefits.

It also mentions a Buy for Good non-profit scheme being set up in the city, which awards contracts that “have a positive impact on the local economy’. Does this relate to Birmingham’s Business Charter for Social Responsibility, awarded by the city council?

Follow the link to read about the Charter’s emphasis on creating employment and training opportunities, buying locally when commissioning and contracting, protecting the environment, minimising waste and energy and employing the highest ethical standards in their own operations and those within their supply chain.

The ministerial statement may be read in full here: http://www.theyworkforyou.com/wms/?id=2014-07-21a.107.0

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Calls for a living wage

Andrew Lydon writes that, over the last year, probably the most radical proposal made by Labour leader Ed Miliband is about the Living Wage and Living Wage Zones:

minimum not living wage logo“Living wage zones would work for everyone – the people who get decent pay, the employers who get a more committed workforce and the government that saves money on credits.” He said the proposal was a labour market reform that tackled in-work poverty and lifted productivity without boosting the welfare bill.

Refocussing on raising the minimum wage, on the 19th May Miliband launched a report by a previous vice chair of KPMG, Alan Buckle, who looked at the issue through ‘business eyes’. He says action on low pay should be seen as part of a wider strategy to move towards a high skill, high productivity economy and that we should recognise that higher pay will be good for government finances, in terms of the need for fewer tax credits and a lower social security bill.

jrf logoThe Joseph Rowntree Foundation’s Minimum Income Standard project aims to define an ‘adequate’ income. Read more here.

Of the 400 councils In England and Wales 82 are now paying or committed to pay their staff the living wage. All 32 councils in Scotland are living wage employers paying their staff at least the living wage.

As Citizens Advice Scotland’s Chief Executive wrote to the chancellor earlier this year, economists suggest the economic multiplier for income transfers to low income families is higher; they estimate that for every pound GDP increases by £1.60. Families with low income spend the additional money, stimulating the economy by boosting demand and supporting businesses.

living wage logoBut what of private business? Archbishop John Sentamu, who chairs the Living Wage Commission, points out that hundreds of employers – those who are able to do so – have begun to pay a living wage?

In a Huffington Post article, Jehangir S. Pocha, the Delhi-based editor-in-chief of NewsX, said:the one thing that would combat poverty without bankrupting the exchequer – is getting businesses to pay workers a living wage . . .”

Andrew Lydon looks for evidence that the ground is being prepared and we wonder if will ever become the norm. Pocha sees a profound psychological obstacle to achieving a living wage (and, we would add, other reforms):

“This social assumption that “they” are inherently different from ‘us’ and do not have to have access to things like decent housing, clothes, food, leisure, education and health care is etched into the Indian psyche”.

This social assumption is also etched into the psyche of British decision makers and their corporate allies.

Political and economic devolution

The vision of Birmingham’s council leader

b'ham council house

The prospect of a powerful city region level of government administering economic development, transport, skills and housing across the West Midlands has been raised by city council leader Sir Albert Bore, who used his annual budget speech to set out his vision of a “new model for city government”.

‘Roadblocks’: Chris Game from the Institute of Local Government Studies at the University of Birmingham commented in the Post:

“As Yes, Minister taught us, Whitehall bureaucracy trumps local democracy every time. You wonder whether the politicians who signed up to that 2010 decentralisation pledge ever really believed in it . . . Cities Minister, Greg Clark, at least tries to walk the localisation walk, with his City Deals policy of stimulating city-driven economic growth through negotiated packages of powers and discretions. However, doubling until recently as Treasury Financial Secretary, few knew better than Clark where the serious power in Britain resides, irrespective of who’s in government”.

The serious power in Britain resides in Whitehall departments and ultimately Her Majesty’s Treasury . . .

An Institute for Government study of the “obstacles to decentralisation” concluded that the most insurmountable obstacle is the in-built scepticism of a civil service whose worry is that local councils would “do something barmy” if handed additional powers and budgets.

It almost beggars belief, doesn’t it? The civil service folk who brought us the NHS IT programme, the poll tax, the Child Support Agency, and mothballed aircraft carriers sit around worrying about other people’s sanity and competence!


Contribution on devolution from LWM board members Cllr Phil Davis and former Director of the West Midlands Regional Forum of Local Authorities, George Morran: http://ourbirmingham.wordpress.com/2014/03/21/devolution-is-in-the-air-but-like-hinduism-has-diverse-traditions/

Birmingham’s budget dilemmas: defences against the vandalism of austerity

I’m just looking at the Birmingham City Council service reviews and budget consultation to make Localise West Midlands’ response – emphasising ways in which the Council can maximise local multiplier to reduce its whole system costs.
As a citizeSaveMRBn it’s incredibly frustrating to see the city forced into making such ridiculous choices. In my own area the likely closure of the much loved Edwarding swimming baths is painful to think about, but I know this is mirrored by similar swimming losses and threats to other vital local facilities across the city.  Then, talking to officers,  it’s clear that many of the procurement staff who were dedicated to maximising local returns from procurement are no longer in post: the cost saving of each salary needs to be set against the value of the contracts they would have brought in to the local area. I don’t think Birmingham City Council are yet calculating net costs and gains in this way, but hope I’m wrong.
Then of course there are the few who are still convinced by the false economy logic of the austerity agenda. In the collated responses to the inclusive economy part of the service review, I found the following perplexing little extract – albeit thankfully a lone voice:
“I object in the strongest terms to the whole idea of an inclusive economy. Do not spend my money on “addressing inequalities ” because you should treat all your residents equally. Every time you redistribute wealth you are incentivising dependency and failure. Your review has missed the point. Let people alone and they can work their way out of poverty. If you ‘ensure’ people have ‘skills and opportunities’ you are just going to treat them unequally and that is wrong. I think the review is deeply biased to outdated socialist notions and you need to modernise your approach.”
Someone obviously doesn’t quite understand that the inequality status quo didn’t arrive by laissez faire but by public intervention of the wrong sort.
Worth posting to demonstrate why it’s important to have some more progressive engagement with this agenda!
By contrast, Enfield Council are tackling the same set of problems by mobilising pension funds and persuading companies with large local markets to employ local people, and Preston Council are promoting employee buyouts to safeguard jobs and increase local control over the economy. Further afield, the advantages of municipal utilities are being rediscovered.ShitCreekPaddleStore Plenty of scope for Birmingham to learn from these and take them to a new level.
So – despite the vandalism of austerity, there are things we can do….
Karen Leach

Three vital advantages of municipal utilities

bob massie president new economics instituteBob Massie of America’s New Economics Institute sent news today that voters in Boulder, Colorado, have ended their relationship with Xcel Energy, a utility with $10.7 billion in revenues, clearing the way for the city to form its own municipal utility that would lower rates and make greater use of renewable energy.

The city’s ‘multiple pleas’ for more clean wind and solar power had been turned down by Xcel which then financed a new coal power plant.

boulder cycle demo

During a vigorous campaign that attracted national attention, corporate executives and their allies mounted a well-funded operation, arguing that the city had neither the money nor the expertise to manage such a complex enterprise.

boulder graphicAdvocates for the municipal utility, including the New Era Colorado Foundation, fought back with a successful crowd-funding campaign, attracting public attention with imaginative activities.

There are 1000 municipal utilities in the United States, serving 50 million customers. Most  are owned by cities, and controlled by panels of local citizens. Some are cooperatives owned by their members.

boulder john farrellJohn Farrell, who directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance, points out that if the city moves ahead, it would capture nearly $100 million currently spent on electricity imports and create up to $350 million in local economic development by dramatically increasing local clean energy production.

Proponents of change have argued that public control creates three vital benefits:

  • First, decisions are made not by distant corporate managers whose first priority is to generate returns for absentee shareholders or to pay enormous salaries for executives, but by managers who are accountable to the community.
  • Second, because of this, municipal utilities can focus on important local goals, such as investing in renewable energy, efficiency, and other factors that increase community resilience.
  • And finally, the rates of municipal utilities are traditionally lower than their counterparts, and they channel any financial surplus — also known as profit — back into the community.

 boulder poster

Massie comments: “The entire model of a corporate utility operating a centralized grid is facing steady erosion. Universities and cities across the country are expressing their desire to move away from both hiring — or even owning stocks — in companies that remain committed to fossil fuels. In addition, every family who installs solar on their roof not only slashes their need for energy from a utility, but also cuts the revenue for those same firms.”

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Reviving a genuinely local entrepreneurial culture

david boyle2Innovative thinkers often have to wait ten to twenty years before their concepts become mainstream. Two years ago David Boyle (New Economics Foundation) listed ten linked propositions, many borrowed from the most successful cities in Europe and North and South America, which could effectively allow cities to take back control of their economic destiny.

Agreeing with the City Growth Commission that a new economic agenda is emerging in these successful cities (and setting aside the issue of the desirability of growth) these propositions offer a more interesting and convincing contribution to the Core Cities debate, than Jim O’Neill’s four points:

Boyle’s ten linked propositions offer an outline agenda – a composite drawn from these urban centres:

  1. Rebuild local economies by plugging the leaks that are draining local money away. How money circulates in an area is just as important as the amount of money flowing into it. Traditional economics suggests that cities must specialise. That may be true for the largest businesses, but it is irrelevant for local business. For them, the best way forward is not just by specialising, but also by building diversity and looking for ways of replacing imports.
  1. Develop local diversity and distinctiveness. Too many of our cities have devoted their imagination and resources to making themselves look the same as each other. But because economic diversity keeps money circulating locally, it is critical that any new developments design well-being, distinctiveness and sustainability indicators into Master Planning processes and that any new retail effort must make high streets more, not less, diverse.
  1. Bust local monopolies to let enterprise flourish. One major reason why so many of our local economies have been hollowed out is that so many cities have been using net wealth destroyers as anchor stores.
  1. Organise enterprise coaching, support and advice in every neighbourhood. Coaches, backed up by a panel of local business people, bank managers and other local volunteers, can help to break down the barriers preventing enterprise from starting, replicating the kind of social networks that successful places have.
  1. Use local resources to build an effective new local lending infrastructure. Our businesses are now in a far weaker position than American or German competitors, and potential competitors, because we have no equivalent lending infrastructure. The real problem is not lack of capital to lend, it’s a serious lack of institutions capable of lending it.
  1. Invest in local energy. At present only 0.01 per cent of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings. In Germany the equivalent figure is 100 times higher.
  1. Use waste products as raw material for new enterprises. Traditional economics confines its interest to the point where money becomes involved and to the point when a product is thrown away. Cities are often blind to the potential value of what is wasted and thrown away – because all these have potential for enterprise.
  1. Use public sector spending to maximise local money flows. Making sure that public sector contracts build the local economy, and provide permanent economic assets for depressed areas.
  1. Launch a range of new kinds of money. Successful models are now running all over the world, keeping local resources circulating locally and providing independence for impoverished communities. They can provide low-cost or free credit, and – in some countries – they underpin whole sectors of the economy.
  1. Experimenting with new kinds of credit creation for local public benefit. There will be occasions when regional economies require the creation of new public money, free of interest, where necessary to cope with unprecedented financial emergencies, and as the basis for loans to rebuild the infrastructure of productive local economies.

Boyle notes that not all of these ideas could be organised without central government support, but that the rest could be done by imaginative and forward-looking city leaders, grasping the new powers of general competence made available in the Localism Bill.

 

Read the full article here.

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