Municipal lending isn’t a novel idea. For centuries, citizens have been lending to local government and now it’s making a comeback.
Municipal lending is a loan from citizens to their councils.
This way of borrowing has been around since the 1500s, helping fund crucial local infrastructure across the country. It fell from popularity due to high administration costs, but now we’re bringing it back for the digital age.
Our new generation of citizen investors find it rewarding to see their money make a tangible difference and build real things.
Councils are the bedrock of our society. They have over 1,200 statutory responsibilities to keep our communities running, and they invest to create a thriving future for our places. Municipal lending is a way that citizens can get involved in delivering that brighter future.
It used to be common for UK councils to borrow money from their residents as an alternative to banks, other institutions or the government.
Regional stock exchanges and municipal bonds shaped and strengthened places across the UK in cities such as Manchester, Liverpool, Glasgow and Bristol.
Municipal bonds have been used as far back as the 1500s to finance local infrastructure. They allowed councils to fund railway expansions, water supply systems and electric grids, and gave citizens the chance to have a stake in the future growth and development of their places. At the start of the twentieth century, as much as 20% of council borrowing came from municipal bonds.
It is on these foundations that our own municipal investments are built. In this era of unpredictable financial markets and opaque cryptocurrencies, we want to connect people with what their money is really doing.
In the late 19th and early 20th centuries, Bristol Council offered bonds to expand its port, improve roads and develop public utilities. These bonds attracted local investors, who earned financial returns and made a tangible impact on key infrastructure in their growing city. Some perpetual bonds from the 1940s are still paying returns today.
For generations, the idea of being an investor in a town or city was commonplace. Across the 19th and early 20th centuries thousands of ordinary people became active stakeholders in their place by investing in municipal bonds. At a time when many people were unable to open bank accounts, these investments showed how councils can play a role in building a more inclusive financial system.
“I’ve actually stood in places where the work has been done and thought: my money helped make this happen. That’s a really good feeling.”
Citizen investor, Hammersmith & Fulham Council
Today, our municipal investments are bringing back this idea of tangible, local investment for the digital age. Since 2020, thousands of people across the country, from all walks of life, are becoming investors in their places. And it is already starting to have a transformative effect on how they see, and engage with, their councils.
“[I invested because I am] funding initiatives that mean something to me, in a place that means something to me.”
Citizen investor
Councils are the bedrocks of our communities. Day-to-day, they have over 1,200 statutory responsibilities, ranging from collecting our bins through to housing and providing social care in the community.
And they are also obliged to prepare us for the future, too. We need public infrastructure that is ready for the social and environmental changes that will come over the next decades. Whether tackling climate change, or ensuring a bright future for local businesses, councils are working hard to make sure our places thrive long term.
Much of this essential work is invisible. But one thing is clear - life would be difficult without them. We’re proud that our investments help any citizen play a role in creating a thriving future for the places we care about.
Provide essential services
Local government has over 1,200 statutory responsibilities in their role to keep our communities running.
Plan for the future
Develop and deliver strategies to ensure our places work for everyone both now and in the future, responding to generational threats like climate change, and evolving social change.
Emergency response
Ensuring the safety and security of their communities, whatever is thrown at them.
Reseach from Innovate UK and PWC shows that locally led initiatives are often far more effective than national strategies for creating positive impact - delivering up to three times more impact per pound spent.
Read the researchCouncils have two primary types of outgoings: day-to-day spending - like social care, education, waste management; and long term capital investment - like community infrastructure, housing and transport. Up to 20% of council budgets are typically capital investment.
The money to fund capital investment typically comes from internal resources (such as revenues or from sale of assets) or from government as capital grants, or borrowings from the Public Works Loan Board (a public body that lends money to councils from central government) or other commercial or state lenders. Our municipal loans are another way for councils to borrow money for these project investments.
Our vision is to create a future where more and more of these funds come from engaged citizens with a real stake in the future of their place, and places they care about across the UK.
