In an article that’s short on detail and long on vague intent, Andy Haldane looks for collaboration both from central and local Government. What is missing is the sauce that makes a number 1o in Manchester or a number 11 in Darlington work – capital to spend.

This won’t work in the UK until massive amounts of money are shifted off the books of the central government.

This implies a massive cut in income taxes raised by the central government. Otherwise it will be a joke. Central government expenditure as a percentage of total government expenditure:

UK: 80.3%

US: 51.3%

Switzerland: 42.2%

Source: OECD (Fiscal Decentralisation Database)

This is of course is not my comment but I have checked the source and agree  with the anonymous commentator.

Haldane’s article can be read here on a free link.

What I don’t think will go down well is an increase in public servants at the cost of local and income taxes or a deferred bill through borrowing more.

Those of us who follow Andy Haldane (and read this blog) will know that Haldane has his own way out of this problem. You can read him here on a Field of Dreams.

Pension capital is not risk free for local investments. Trustees could and should expect income and growth from the investments made. If it is not forthcoming it is a failed investment so the usual standards of governance will be required and that is why we’ll need the existing infrastructure which has been put in place.

To jump-start change, these gaps need to be filled — and fast — through upfront investment. One way of doing so, at no added fiscal cost, would be to make use of the more than £100bn already committed to the UK’s so-called public financial institutions (PuFins) 

Top-slicing 10 per cent of their committed capital would give each MCA a £1bn endowment. That would enable them to build a Good Growth Fund — the model recently pioneered in Greater Manchester and championed by Burnham.

This has successfully tempted pension fund and private investors into local strategic projects.

The trouble for Government is a voluntary system to encourage this investment, this is not a risk free investment for private investors and especially pension trustees with their fiduciary duties.

Haldane’s “Field of Dreams” proposal is to offer what is no more than what pension schemes get today – mostly tax-free growth – in return for what in the short term will be seen as extra risk (not least in getting money back – liquidity).

It will be a fine balance between encouraging local investment by pension funds and penalising pension schemes that don’t commit to it. This is the chronic issue with left wing policy and it pre-occupies pension folk. This is the issue that Jo Cumbo and Tom McPhail will talk about at an investment discussion of the Pension PlayPen at 10.30 am on Tuesday.

I suspect that neither Haldane nor Burnham  have yet won the hearts of pension investors. There is much discussion to be had.

Join Tom McPhail and

Jo Cumbo by clicking here

If you want to paste the URL into your diary , here it is

https://teams.microsoft.com/meet/330165062830116?p=3x8RwCVDsES4ThSrKl