Whenever UK citizens go to the polls for local elections, everyone from pundits to psephologists try to divine the “message” that voters were trying to send to the government of the day.
But the search for a national story risks losing sight of the shift in focus of voters since the pandemic, which demonstrated the need for action at a local level and placed local councils on the front line of delivering support direct to communities in crisis.
Local councils are finding their founding purpose again – to build communities – and a new wave of councillors has been elected on a mandate to act on pressing issues such as the climate emergency which threaten the resilience and wellbeing of those communities.
Before the pandemic our perception of our local councils was as guardians of the necessary, even mundane, services we take for granted, from bin collections to libraries, local transport to social care.
Voters were encouraged to judge their council as consumers of its services rather than in the spirit of councils’ founding purpose which was to finance, build and manage the infrastructure we need in our daily lives. This finance was funded by local people investing in “municipal bonds” issued by their local council. In Victorian times it was local councils that built the water, energy and transport networks we still use today.
Wind the clock forward 150 years and the idea of municipal bonds and investments had all but died out, but local councils still have the powers to raise finance in this way, and since the ground-breaking Local Climate Investment from West Berkshire in 2020, they have taken up the baton again in increasing numbers.
The impetus for action is the climate crisis. Recently published research from social think tank MySociety highlighted that people see local councils as having an important role in the response to the climate crisis, and as more than 75 per cent of local councils have now declared climate emergencies, voters are looking for actions and not just words to back up the declarations.
In the case of West Berkshire, which was followed by Warrington, Islington, Camden and now Cotswold District Council, actions mean everything from installing solar panels to converting bin lorries to become electric vehicles.
For local councils, raising money from local residents is more cost effective than even borrowing from central government. For investors, who are usually asked to invest their money over five years, returns are now above two per cent (including the option to receive returns tax free by including it within an Innovative Finance ISA) with the latest investment from Cotswold.
This increase reflects rising interest rates from the Bank of England and the signalled end of quantitative easing (called quantitative tightening which turns off the money printing press that has been running for the last decade since the financial crisis).
The Treasury has followed suit, issuing its own green bond last year to fund specific climate measures via National Savings & Investments, initially paying 0.65 per cent and more recently 1.3 per cent a year over three years. At a time when rates on cash savings are still very low, the dual benefit of taking local action on the climate crisis and getting a return of two per cent or more, is attractive for those who are willing and able to make a long-term, low-risk investment.
Looking forward, the potential for “public finance” as the means to fund the very practical and down-to-earth measures we need to take as communities to “do our bit” to tackle the climate crisis is significant, because billions of pounds currently parked in cash deposits is being eroded by inflation, and there’s a growing awareness of the need for action on the part of citizen voters across the UK.
Local councils embracing this change are finding it reduces the
cost of taking action, at the same time as ensuring more of the financial return stays in the local economy rather than being paid to central government coffers.