New research points to a bright future for our municipal investments

Building civic value by creating more engaged citizens

Today Dr Mark Davis and Dr Emma Hyde of the University of Leeds have released a new report - Making Places Better, Together - which examines the case for municipal investments beyond the financial returns. They found that these investments provide a simple and practical way to increase civic participation by developing new forms of public engagement that transform residents into co-owners of a shared civic mission.

Through interviews with citizen investors and councils, they found that municipal investments have the potential to reset the relationship between local government and residents - creating a more substantive form of democratic engagement, linking public participation directly to local economic development and place-making.

“Rebuilding Britain is going to require new ways of financing local infrastructure while enhancing public purpose, developing innovative financing arrangements that support productive investment rather than financial extraction.

Municipal investments provide councils and city-regions with access to locally rooted capital and strengthen civic engagement by keeping investment returns circulating within local economies. In our research we have heard directly from councils and investors how this type of investment is a vital civic innovation that is building stronger, fairer and more robust places for the future by giving people a real stake in the places they care about.”

Mark Davis, Professor of Economic Sociology at the University of Leeds, co-author of Making Places Better, Together

Municipal investments are a credible alternative to PWLB

Earlier in September the Green Finance Institute, in partnership with the University of Leeds, published a new technical paper: Community Municipal Investments - Bringing the Benefits of NS&I to Local Government. This analysis is the first to look at the financial value of municipal investments for councils, and explores the benefits of scaling the model for the local government sector.

The findings point to a structural shift in how councils could fund investment. To date, municipal investments have raised money consistently under the PWLB Certainty Rate (including fees), and the analysis shows that municipal investments would have been cheaper than PWLB almost 90% of the time over the past decade.

Looking to the future, the authors find that using municipal investments is not a niche opportunity. Given they require no departure from established borrowing practice, billions of pounds of annual council borrowing could be funded through municipal investments.

“Municipal investments are a credible, lower-cost complement to PWLB. At the same time, municipal investments provide diversification away from a single funding source and open up access to a deep pool of citizen and values-aligned institutional capital.

At a system level, the opportunity is significant. Over time, municipal investments have the potential to become a long-term, citizen-backed source of affordable finance for local government. NS&I has been transformative for central government over the last 160 years, and this model offers a clear pathway to deliver similar benefits at the local level as a low-cost, patient and diverse source of borrowing.”

Miles Ashton, Associate Director, Green Finance Institute