Public sector faces ‘tsunami recession’

By Alex Stevenson

Radical innovations from local authorities are needed in the face of a “tsunami of a public sector recession”, a thinktank has said.

The New Local Government Network (NLGN) has suggested councils should look at new ways to raise money as capital spending funds from central government, constrained by spending cuts, dry up.

It proposes going directly to capital markets through bond issuance and raising money through a workplace parking levy once the recession is over.

The report, Capital Contingencies, also suggests changing lending approaches to put private finance initiatives on a level playing field with other local capital finance models.

“Local authorities are the principal agents in much of the nation’s infrastructure development and must be ready to rediscover the skills and techniques that can enable self-determined capital investment,” NLGN director Chris Leslie said.

“The constitutional circumstances which have created a local government community almost totally reliant on Whitehall now risk leaving much of our public services and facilities bereft of investment.

“We urge preparedness within the sector for the looming political obsession with national debt which could see a Treasury cutting capital grant and loan availability severely.”

The Treasury is expected to cut capital expenditure from £44 billion to £22 billion by 2013/14.