The Clancy administration, recently congratulated on its decision to look at how ‘anchor’ institutions can use their spending power to increase economic opportunities for all the city’s communities, businesses and citizens, has now suggested a way of investing directly in positive assets to the city: “housing, other infrastructure, and long-term venture capital investment in our own people in small and medium-sized businesses across the city – ‘rewiring pension fund investment into these bonds’. . . getting a massively better return for investors (large, small or individuals) in our cities and especially from pension funds”.

In 2003 the New Economics Foundation published a report on local authority bonds, ‘People’s Pensions’ by Colin Hines, formerly co-ordinator of Greenpeace’s International Economics Unit, senior accountant Richard Murphy and MP Alan Simpson. The Stirrer recalled that in 2004 Cllr Mike Whitby considered financing a new central library using such Brummie bonds and a comment:

john-clancy“I think it’s the way forward to finance big projects instead of going cap in hand to London and the banks,” said Councillor John Clancy, who once worked in the venture capital market: “Giving local people the chance to invest in culture and regeneration will increase civic pride and make people far more confident in their city.”

The same blog reported in 2008 that bond issues are used to raise finance by federal states in Germany and many other local authorities around the world. Municipal bonds financed the civic infrastructure and utilities of our cities until the Thatcher government limited local financial independence. The following year, the Financial Times reported that Birmingham city council was working on plans to use Brummie bonds to refinance the National Exhibition Centre, buying back the original stock and issuing new bonds.

Councillor John Clancy, now leader of the council, today recalls in the Leader of Birmingham mailing that – as noted above – he has been arguing in articles, books and blogs for years that we need to be much more innovative and creative about our assets in Birmingham and the West Midlands: “I’ve suggested a way of linking investment directly to positive assets in the city: housing, other infrastructure, and long-term venture capital investment in our own people in small and medium-sized businesses across the city – a 40-ward investment strategy. An access-all-areas investment, not just for big commerce in the city centre but across all of our local centres delivering an inclusive economy that works for all. In particular, I have suggested rewiring pension fund investment into these bonds”.

The Stirrer similarly: “The trillion pounds in private pension schemes could be invested into local authority bonds for reducing energy use in public buildings and its council housing stock, through efficiency, combined heat and power and renewable energy for buildings. Part of the savings would fund the repayments due on such bonds. The lead could be taken by Birmingham which used local authority bonds to develop the city in the last century. It is now the biggest landlord in Britain, owning more than 80,000 houses and flats, many in need of repair and energy inefficient. A “Brummie bond” could fund a carbon army of local workers to make its entire housing stock energy tight, warmer and cheaper to heat. Renewables such as solar electricity, solar water heating and larger scale combined heat and power systems would all provide business opportunities in the area”.

A report in today’s Sunday Telegraph seems a little familiar to John Clancy. It says that ministers are preparing radical pension reforms to help millions of savers get better returns, including schemes to get pension funds investing in building projects. No 10 is also looking at whether cities such as Manchester, Birmingham and Coventry can be allowed to raise their own bonds, with the proceeds spent on local infrastructure. One idea being considered is to give cities and city regions powers to create “city bonds”, raising up to £1?billion that would be underwritten by the Treasury.

John Clancy comments: “The Telegraph article even mentions the Social Impact Bonds I’ve been pushing for the last five years; and we already do them hereCould it be that these central planks of ‘Brummienomics’ are starting to resonate in Whitehall? I really hope so” and ends:

“So I welcome today’s reports. It is time to be more radical. It is time for cities and city regions to take even more of a leading role in the post-Brexit economy”.

Read John Clancy’s article here: