The FT has reported today that:
Britain's local authorities are on the verge of creating a multibillion-pound municipal bond market, amid growing friction between cash-strapped regions and a persistently belt-tightening central government.
The first bond issue by a new municipal debt agency, expected in April, is set to raise £250m-£300m, with annual issuance likely to ramp up quickly to £2bn-£3bn, according to people close to the project.
This is something I have long campaigned for. Indeed, I first wrote on the issue at the same time as the tax justice campaign was beginning.
My logic has always been threefold.
The first was that local authorities could reduce their borrowing costs by raising funds in combination. That now seems to be true.
Second, buying local binds represents a form of hypothecated saving that will appeal to many in the UK, and so these bonds will be an ideal investment for pension purposes.
And third, this is one of the ways to fund the Green New Deal. These bonds could, of course, be repurchased using Green QE to inject money into local economies up and down the UK. They are perfect for the purpose and another necessary step on the way to achieving that goal.
As a result this is an idea whose time has come, and is another campaign win twelve years after Colin Hines and I first wrote about it.
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I remember the days when councils were second only to building societies in granting mortgages.
Carol
I won’t say what that says about you
And me
Richard
Is there any reason why local authorities stopped administering mortgages ?
Would it be more cost effective for local authorities to administer these rather than housing benefit ?
In a word, Thatcher was the cause
Housing benefit would stiull be needed where property has been priced out of most people’s reach
Well, I am over fifty, Carol, and I can’t remember this.
That’s all I’m saying!! 😀
Well that’s done it then………I’m sticking with you Richard from now on.
Such bonds would become more attractive if they were also legal tender for the payment of local taxes.
Similar to this MMT-inspired proposal for the Eurozone’s problems..
http://www.levyinstitute.org/publications/the-continued-relevance-of-tax-backed-bonds-in-a-post-omt-eurozone
Slightly off-topic, but I wonder if Varoufakis is cooking something up like this to square the circle that is the Euro?
He is a clever guy
About time, though I know that the government would not let councils issue bonds unless they had a middle man to profit out of it.
I have forgotten where I read this, but it is typical that the tories would want to put profit for their mates ahead of people’s needs.