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Local Authority Collective Agency - Driving Efficient Financing for the Future

Learn about the initiative spearheaded by local authority collective agency in collaboration with Mark Luntley. Discover what has been achieved so far, key conclusions, and upcoming steps. Explore the vision of creating a transparent, efficient, and collective financing model to stimulate the market, reduce costs, and support prudential borrowing.

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Local Authority Collective Agency - Driving Efficient Financing for the Future

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Presentation Transcript

  1. Local authority collective agency Mark Luntley

  2. Today • Why • What we’ve done to date • Headline conclusions • Our planned next steps

  3. Why • PWLB • International lessons • Stimulate market/reduce costs • More than money • Self confident sector • Small and large councils

  4. Steps • Specialist advisors • Political oversight • Technical reference • City discussions • Sector consultation

  5. Approach • 5 case model • Different options considered • Detailed evaluation • Cross guarantees • Capitalisation

  6. Vision • AAA/Aaa • Values: • Straightforward • Transparent • Collective • Efficient

  7. Drivers • Stimulate market • Educate bond investors • Support principles of prudential borrowing • Looking outwards to other nations • An alternative to PWLB – but mixed economy

  8. International models

  9. Developing a model • Capitalisation not cross guarantees • Uplift on individual ratings • Asset quality • Liquidity • Rules • Diversity of councils

  10. Headline conclusions

  11. Headline conclusions • 97% of sample councils interested “in principle” • AAA/Aaa possible • Lend at 0.7% to 0.8% above gilts • @£2.5m/ < two years to establish • Between £2m and £4m a year to operate (depending on complexity) • 25% market share

  12. LGCA structure

  13. Bond prices

  14. Risks – set-up • Government policy changes • City • Lack of sector interest (or waiting for another to lead) • Set-up costs • Alternatives emerge

  15. Risks - operational • Changes in prudential code • Reduced demand • Prudential code changes • PWLB changes • Actions of individual council(s)

  16. What now? • LGA Exec agreed (Jan ‘12) • Six months: • Detailed consultation on proposals • Determine sector/investor interest • Liaison with Government • OJEU procurement • Detail of arrangements

  17. Aim – August 2012 • Lead councils + funding in place • Shadow board • Agreement on shape of agency • Clear steer from government • Advisors identified • Rating?

  18. Questions? Mark Luntley 07909 962193 0207 664 3336 mark.luntley@local.gov.uk

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