Council announces plans for new £30million investment fund
Published on Friday, February 17, 2017
COUNCIL plans to invest up to £30milllion in local property and other investment opportunities in Leicester have been announced.
Leicester City Council is proposing to set aside £10milllion for investment in commercial property. A £20milllion investment fund will also be set aside to take advantage of new opportunities which benefit the local economy, by attracting private investment and creating new jobs, while still offering a secure return on the council’s cash.
The £30milllion proposed investment fund would use council money currently sitting in the banks and set aside specifically for paying off part of its £200million debt. This debt has accrued as a result of borrowing to pay for major projects such as roads and schools. Money to repay it is raised every year. This money cannot be used to fund council services, or to offset Government cuts.
At present, low interest rates set by the Bank of England mean that any such money in council savings accounts is not gathering a good level of interest – only about 0.5 per cent.
Also, under current Government rules, councils that repay their debts early will face penalties.
This makes it more economical for the council to invest this cash in schemes with the potential to offer a better return and help boost the local economy.
City Mayor Peter Soulsby said: "It is vital that we look at every opportunity to make our cash balances work as hard as possible for good returns and the economic benefit of the city.
“This is money that is currently sitting in low interest bank accounts as security against borrowing from the government to pay for major infrastructure projects. Like many other councils, we are now looking at ways that these cash balances can be used to generate a better return and to support local economic growth and prosperity.”
Last year, the city launched a new £20milllion Enterprising Leicester investment fund, which offers loans of up to £4million to businesses or developers looking to invest in the city. This uses cash balances in the same way as is being proposed for the new investment funds.
Hastings Direct is the first company to benefit from the Enterprising Leicester investment fund, with a £4milllion loan to support its expansion and help create 500 new local jobs.
A formal decision on whether to approve the new investment opportunity fund is due to taken on Monday 27 February.