Wed, 20 May 2020
COUNCILLORS have given the green light to a £1m community bond that will help fuel its environmental strategy.
West Berkshire councillors voted to approve the UK’s first Community Municipal Investment (CMI) – a bond or loan issued by a local authority directly to the public – at a meeting.
Residents and community groups can invest directly with the council to help fund its environmental strategy.
The council declared a climate emergency in July last year, with the aim of making the district carbon neutral by 2030.
The council said a minimum investment of £5 would be used to support projects in its strategy, including installing rooftop solar panels on a building at Greenham Common and on local schools.
Future projects include natural carbon reduction measures, an urban tree fund and further solar schemes.
Speaking at a virtual meeting two weeks ago, executive member for the environment Steve Ardagh-Walter (Con, Thatcham Colthrop and Crookham) said: “We look forward to this measure helping us to grow our environment strategy quite significantly.
“It will give us significantly more financial firepower and at a lower borrowing cost without us having to resort to the PWLB [Public Works Loan Board].”
Leader of the council’s Green minority opposition Carolyne Culver (Ridgeway) said the scheme was a great idea, but asked about the interest rate and what projects would be funded.
She said: “It says it will be a solar pilot, but if other schemes come forward first it could be other things.
“How are we going to sell that to the public about what’s on offer?”
In response, executive councillor for finance Ross Mackinnon (Con, Bradfield) said there was no need for concern.
He said: “The intention is to put it into a solar PV project.
“The risk of promising that on its own right now, with social distancing and the Covid crisis, is some of those projects are a little bit behind.”
Mr Mackinnon said he was hopeful that the situation would be clearer by the time the scheme launched.
He said the scheme presented a “win, win, win” situation through a “triangle of happiness” – offering a cheaper rate than the PWLB, investors getting a decent return on their investment and would be a much more attractive low-risk investment because of the turmoil in the equity market.
The interest rate on the scheme is expected to be between one and 1.2 per cent, he added.
The scheme could go live immediately, but Mr Mackinnon said residents had been going through a tough time because of the pandemic.
He said the council would gauge customer and resident appetite “to make sure residents are willing and able to invest in this”.
The project’s timescale and scope was questioned by Adrian Abbs (Lib Dem, Wash Common), who said the council needed to be more ambitious.
He said: “£1m of solar PV gets us about 1.1MW.
“Our strategy talks about 21.5MW.
“The clock is ticking. Every time we introduce a delay we are going to likely miss our target and I would really like us to meet our environmental climate emergency target.”
Mr Mackinnon replied it was “maybe a trifle unfair” to say the council lacked ambition when it was launching the first scheme of its kind in the UK.
He added that the council was looking at launching similar investments if this one proved successful.
The council said the bond scheme would offer a cheaper financing rate than using the PWLB, its main source of borrowing.
The prevailing rate of a PWLB loan over five years is around two per cent.
The council will pay a rate around 0.5 per cent below this rate through the bond scheme.
It said a net saving over the bond life would be between £13,000 for a five-year bond and £24,000 for a 10-year bond.
“Though this is not a significant saving on its own, it does represent a reasonable reduction in the overall cost of borrowing,” council documents state.
The CMI will be provided in partnership with the online crowdfunding platform Abundance Investment, which is regulated by the Financial Conduct Authority.
Abundance Investment co-founder and managing director Bruce Davis said: “It is great to see West Berkshire leading by example to their citizens and to other local authorities.
“Local councils are well placed to lead not only recovery from the current crisis, but also the coming need to deliver a net zero future and build our resilience against climate change.
“By launching this pioneering investment product, West Berkshire is helping to ensure that the first pounds invested in the economic recovery will be green ones.”
For more on the scheme and to sign up, visit www.abundanceinvestment.com/west-berkshire