My Lords, I express support for the principle of the amendment moved by the noble Baroness, Lady Wheatcroft. The combined authorities need more independent power to raise money for good local
projects and I accept that we have to break away from the kind of Treasury stranglehold, as it were, that operates in this area. I would be interested to see how far the DCLG and its excellent Ministers, who are very committed to devolution, are getting on with the Treasury on this question. We look forward to the response on that. However, there are two problems, which I know the noble Baroness, Lady Wheatcroft, will have thought of. The question is what the answers are—they may be in the response to the proposal.
First, there is the question of risk if something goes badly wrong. Not only would that be a failure for the combined authority that had sponsored the proposal but it would result in severe losses for local savers. Is there any way of spreading the risk and/or any form of insurance that could maybe bring the big institutions in to bear some of the risk? I am not a finance person, but she is and I am sure she will have thought about this.
Secondly, with a proposal of this kind you need to ask how the market in these bonds would operate. After all, people might have enough money to invest £10,000 or something in the future of their city—I could imagine people being very happy to do that—but their personal circumstances can change. They might want to be able to dispose of that bond. How would a secondary market operate in something that had initially been limited to residents of the area? However, in principle, this is exactly the kind of radical thinking that we need to revive municipalism.
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