Ministers face calls to create a ‘British Investment Bank’

A leading think tank has called on the government to create a ‘British Investment Bank’ to fund infrastructure projects and improve regional productivity.

In a new report out today, entitled Hitting Reset – a case for local leadership, Localis calls on ministers to it create its own version of the European Investment Bank after the UK leaves the EU.

The European Investment Bank is one of the world’s largest funders of energy, housing and large-scale infrastructure projects.

The report argues that leaving the European Investment Bank provides an opportunity to develop a system, which ‘moves the UK away from very targeted initiatives’, where investment centres on the ‘improvement of transport links to London’, or a ‘never-ending succession of bidding for pots’.

Instead, the report says a British replacement has the potential to be far more valuable than the proposed UK Shared Prosperity Fund, which ‘simply swaps Brussels for Whitehall in a handouts system’.

‘After Brexit, however, the opportunity to reform should not be missed,’ the report states.

‘To move forwards, a British Investment Bank should be established, with local enterprise partnerships able to formulate applications for major infrastructure loans alongside local government.’

The report also calls on Whitehall to provide full details about the UK Shared Prosperity Fund, including, how it will allocate money by the end of 2020 and support councils and regions like Cornwall, who heavily rely on EU funding to help them plan for the long-term.

It also calls on the government to create a ‘self-sustaining financial system’ for local authorities so that councils have the flexibility to plan long-term without relying on ‘ad-hoc and politically-motivated grants and funding streams’.

‘The country is sleepwalking into a second lost decade by default,’ said Localis chief executive, Jonathan Werran.

‘Unless we reconfigure our political economy to give our localities the resources, powers and funding required to achieve their full potential, the last three years of Brexit water torture will have been in vain.

‘A reset in how our localities relate to Whitehall and Westminster will be a vital first step to renewal from the ground-up and to restoring a sense of pride and purpose between our places, people and the greater nation,’ added Mr Werran.

Paul Dossett, head of local government at Grant Thornton UK LLP, commented: ‘The relationship between central and local government needs to be reset. For the sector to become sustainable, we need to move to a basis where councils are able to own their own future, support their communities and have the power to raise more income locally.

‘Accountability and responsibility for local services needs to ultimately rest with town halls but, for this to be possible, we need to create a culture where local government is trusted to act in the interests of its residents and businesses and own its risk appetite.’

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