WHY LOCAL AUTHORITIES NEED TO CONTINUE TO INVEST LOCALLY
Anyone watching Panorama on BBC on 31st July 2023 on the financial disaster at Thurrock Council could be forgiven for wondering why a local authority was investing in projects in far flung places? How does this benefit local people? In theory, if the investments made money, then the community would benefit as the Council has resources to put to worthwhile local causes. Of course, that did not happen in Essex and the residents are now paying a heavy price. (iPlayer link attached)
We do not have a full insight into the catastrophic failings of these investments by Thurrock Council and the decision making that led to them. But it’s critical this does not adversely affect the ability of local government to make sensible and prudent investment decisions in their own areas to assist with regeneration.
At the Whatifgroup we have always advocated that Public Private Partnerships are essential to transform places and this is becoming more apparent by the month.
We are increasingly seeing many local authorities becoming more reluctant to invest in local development projects. Without their financial backing many projects will simply not happen; their area will stagnate and businesses and residents move elsewhere to take up opportunities.
At a time when the Government coffers are almost empty, it’s becoming increasingly unlikely that there will be extra resources to stimulate investment for ‘levelling up’ purposes. Therefore, there is a greater need for local authorities to be pro-active in making smart investment decisions alongside private sector partners that have the right commitment and are willing to ‘put skin in the game’.
Local authorities should also bear in mind that property owners and developers are nervous about investing in many types of development at the moment. By collaborating it can reassure them that their investments are more likely to give them a return. The public sector can show the leadership that stimulates investment.
As much as Panorama highlighted some of the risks, there remains clear opportunities for local authorities to support regeneration and gain financially from investing in smart schemes. This may also include involving the area’s local government pension fund in appropriate schemes. It is critical that local authorities consider carefully when making decisions to invest or facilitate investment in development projects. There are ways of de-risking their investments and they should take specialist advice before committing public funds. If
they don’t, the risk to the prosperity of their region is significant and damaging mistakes will continue to add up.
There are now significant parts of the UK where the private sector / institutional investors will be (understandably) reluctant to invest, and we need local authorities in these areas to be particularly pro-active.
Local authorities can provide leadership and also help pump prime essential developments that are desperately needed. We accept that this needs to be managed prudently, but quite often the biggest risk is doing nothing.
