Thomas Aubrey and Con Keating have joined up to speak on plans to finance infrastructure.
If you are interested in this subject, here is Thomas’ paper, we are looking forward to hearing from them on Tuesday 3oth September present ideas and answer questions.
Con Keating tells me
New Town development needs to be holistic in planning, execution and finance.
If not we may see many more developments like Northstowe in Cambridgeshire
A decade on: No Town Centre, No Shop, No GP and the nearest railway station a 15 minute bus journey.
The solution is Development Agencies as were used for the post-war New Towns
Financing these developments using the gilt market would raise gilt yields by 100 basis points or more
Giving these Development Agencies the power to issue long-dated bonds and to levy land value increase taxes would resolve the financing issue.
And add a very interesting government agency bond market for pension funds and insurers – at gilts +100 bp.
Link to the coffee morning with Con and Thomas next Tuesday (3oth Sept) – here.
This is the latest note on how to finance New Town development without crippling the gilt market. It will shortly be published by the Bennett Institute for Public Policy in Cambridge.
In this document Aubrey points to the current state of the UK gilt market being in line with what has occurred in the UK for decades, current yields are not aberrant!
We lived in a crazy world of low bond yields in the last decade and this resulted us not growing Britain. That era is past and Aubrey is glad for it.
But with it, the Government’s capacity to give away money which it isn’t paying much for is over too. Government should not be borrowing money to build New Towns; they should be “self funded”. They should not force up gilt yields. Self-funding can stimulate long term productivity.
I suspect that some readers will be spotting the link to pensions, pensions do have the capacity to build new towns. We have not built new towns with the free money the Government has had and Aubrey is clear. Get houses built
This should be a cracking session next Tuesday, I have many questions and I hope you will come too. Once again…
Link to coffee morning with Con and Thomas (3oth Sept) – here.
For the meantime, read the paper and digest!
Con and Aubrey are to be congratulated for this initiative.
Lessons from post WW2 history in Scotland seem to suggest there was a limited use of borrowing powers and no ability to issue bonds. But we used the term “corporations”
at first, with the less convincing “agency” term brought in to far less effect from the 1970s.
Development corporations in Scotland were primarily associated with the UK’s post-WWII new towns programme, with the New Towns Act of 1946 leading to the creation of corporations responsible for building towns like East Kilbride, Glenrothes, Cumbernauld, Livingston, and Irvine.
These corporations were government-financed bodies with powers to acquire land and guide development to provide housing and attract businesses.
Scottish development corporations had borrowing powers, though these were often restricted to specific methods like borrowing from the Secretary of State or the National Loans Fund, requiring consent from the Secretary of State and/or the Treasury.
The specific powers, and their limitations, varied depending on the legislation governing each corporation, with later legislation such as the New Towns (Scotland) Act 1968 and the Scottish Development Agency Act 1975 providing their restricted frameworks.
Apologies to Thomas for using hos surname there …
My fault – I did the same – now corrected!
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