Treasury bypassed in hunt for new funding

Published: 2010-01-18 11:47:15

Local government has started 2010 by intensifying its search for new revenues, amid concern that Whitehall is moving too slowly to replace grants earmarked for cuts. (Sourced from LocalGov.co.uk.)
 
Localgov.co.uk sister title The MJ understands Local Government Association representatives will meet with senior City figures next week to discuss establishing a local government ‘fund of funds’ which could invest hundreds of millions of pounds in critical regeneration projects, threatened by the financial crunch and Britain’s spiralling debt.

It follows calls this week, led by Newcastle City Council and Kent County Council, for the reissue of local government bonds and other alternative finance tools, to raise vital investment cash, as councils and businesses struggle to secure traditional finance.

Senior officials are also considering the use of cash from the £120bn Local Government Pension Scheme for local investment purposes.

Paul Carter, leader of Kent County Council, told The MJ: ‘This is about how we can create significant added value to the South East and UK economy. The enterprising councils are looking at a range of options.’

The search for new revenues intensified after it emerged local government faced swingeing cuts to Whitehall-controlled grants and budgets from April – a result of ministers’ plan to halve Britain’s soaring debt by 2018. Likely cuts, and declining town hall revenues, could leave local economies reliant on public sector employment, or investment exposed to an economic ‘double dip’, unless authorities find cash to support employment and major investment projects.

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