West Berkshire Council has launched the UK’s first Community Municipal Investment, enabling access to cheaper borrowing rates for environmentally focused projects. Joseph Holmes explains
We are very fortunate in West Berkshire. We have a fantastic natural environment with 70% of the district classified as an Area of Outstanding Natural Beauty, we have a diverse and successful local economy and we have strong performance on education and health measures.
We are also a strongly performing council, though we do have an approach where we do not tend to talk too much about what we do. A recent Local Government Association (LGA) peer review highlighted that ‘partners see the council as having a tendency towards modesty – “to hide its light under a bushel”…we would encourage it to shout more, both internally and externally, about what is delivered and take the opportunity to enable people to enjoy what they have achieved. After all, there is much for the council to shout about’.
Like many local authorities, we had a difficult time financially over the past 10 years and the COVID-19 outbreak has placed a significant new financial pressure upon the council, as well as changing our focus in the short-term. We need to keep using innovation and learning as our key tools for a financially resilient future. The Government funding announcements as part of the response to COVID have provided some certainty over the current financial year, but we know that there is still much uncertainty over the longer-term financial position for the sector.
One area where we are being innovative is through the launch of the UK’s first Community Municipal Investment (CMI). Launched in the middle of July, the £1m ‘bond’ enables us to access cheaper borrowing rates for our environmentally-focused projects. With the sudden increase to the Public Works Loans Board (PWLB) rates in Autumn 2019, there was a greater opportunity for us to save money on borrowing costs through a pioneering solution. Supported by evidence through the University of Leeds, the bond has the opportunity of enabling us to provide a cheaper source of borrowing whilst also engaging with a wide audience, including our residents, on what the bond is funding and why.
The rate of 1.2% was more than 0.5% lower than the loans available to the council from the PWLB at the launch date. The reduced cost of borrowing then helps support core council services. The return that the investor receives is competitive and most importantly they know that their money is funding environmental focused projects.
The major project as part of the bond launch is to invest where we are putting solar PV panels on top of various buildings owned by the council; this includes on schools, a leisure centre, the council offices and a unit at Greenham Common. There are other schemes that are part of our environment strategy that we want to use the bond to help fund. The launch venue was at Greenham Common which is managed by the Berkshire, Buckinghamshire and Oxfordshire Wildlife Trust in partnership with the council, and the launch of the CMI was with Abundance Investment who are piloting this approach and administering the scheme.
What next? Our initial business case expected up to three months for the bond to be fully invested; within the first 20 days of launch, we are already at 47% of invested amount so we hope to meet our initial deadline sooner than expected. We will then reflect on where the investors are and why people have chosen to invest in the bond as well as receive an independent report on the pilot of the bond in the coming months. It is then for us to decide whether we wish to launch further borrowing using this route to meet our aims.
What we do know is that we, just like many across the sector, need to keep innovating, keep sharing what we are doing and to keep working in partnership; all of these ways of working underpin what makes the council continue to be successful.
Joseph Holmes is director of resources at West Berkshire Council