Proposals for Brummie Bonds were first put forward by former Greenpeace economist Colin Hines at the end of 2004 (Birmingham Post – Comment: 5.2.04), at the end of 2004 by then Conservative council leader Mike Whitby mentioned here, advocated in the Stirrer (2008) and frequently by John Clancy (right), before he became Labour council leader (most eloquently in 2011).

Clancy acts, 2017

Professor David Bailey (Aston Business School, Birmingham) welcomed the news that the City has found a new way to finance house-building – John Clancy’s first issue of Brummie Bonds (more detail here):

“The City Council is already building more new council houses than any other local authority in the country – with the Birmingham Municipal Housing Trust building 30% of all new homes in the city last year. But that’s still not enough and using Brummie Bonds to raise £45m to help finance more house building is welcome news. Clancy has talked of Brummie Bonds opening up new funding streams to deliver a “step change” in building homes”.

The Council has stated that the interest rate it will pay on the Brummie Bonds is actually lower than that charged by the Public Works Loan Board (or PWLB – a government body that provides loans to local authorities mainly for capital projects).

Pensions and life assurance specialists Phoenix Life, which employs around 600 people in Wythall, has agreed to invest in a ‘Brummie Bond’ and there is the prospect of other investors coming in. The West Midlands Local Government Pension Fund and other union and business pension funds could take up future issues.

Hines goes further, seeing municipal bonds as a safe haven for ‘People’s Pensions’ – just as when, following the Housing Act of 1919, the London County Council and other local borough councils began to sell housing bonds to the public to raise money for public housing. schemes. He also advocates that, in due course, such bonds would also fund the retrofitting of houses and clean modes of transport.

As Professor Bailey ends: “Hats off to Birmingham City Council for pulling this off. A “confident act of local economic self-determination”? Yes”.

 

 

 

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