Making Places Better, Together
A new report by Mark Davis and Emma Hyde evidences the civic impact of Community Municipal Investments (CMIs) and calls on national government to include the model in its devolution strategy.
UK citizens lend money to the UK Government through National Savings and Investments (NS&Is). What if they could do the same for local authorities?
Funded by an ESRC Impact Accelerator Account award via the Leeds Institute for Societal Futures (LISF), Professor Mark Davis and Dr Emma Hyde in the School of Sociology and Social Policy have spent the summer gathering evidence of the civic impact of Community Municipal Investments (CMIs).
A CMI is a direct loan to UK councils from residents, other citizen-investors and values-aligned institutional investors. Usually held over a 5-year term and managed by the innovative finance platform, Abundance Investment, CMIs pay fixed cash interest payments to investors every six months across that period.
The model was originally co-created through the Financing for Society research project led by Professor Davis in the School back in 2019 and has since been used by 19 UK councils and raised almost £30 million of investment.
A linked Technical Paper, co-authored by Mark Davis and Miles Ashton of the Green Finance Institute, published earlier this month, evidences the financial impact of the model, which:
- was below the ‘Certainty Rate’ of the Public Works Loan Board (PWLB) - the main council borrowing channel – at an average saving of 29 basis points after fees
- would have delivered savings on around 89% of borrowing days
- could meet the medium-term borrowing needs of up to 42% of actively borrowing councils – equivalent to £2.3 billion per year – and generate sector-wide savings of up to £76 million at scale.
The report by Davis and Hyde has instead gathered evidence on the ‘non-financial’ impact of the model, chiefly how it is delivering civic value for councils and investors.
It’s participatory. And I think that’s a real strength of it. It gets people on board with the idea that they’re doing things in their areas […]. People often feel so separated from decisions that are taken for them, rather than by them. So, things like this break down those barriers. Even if they don’t invest in it […] people feel really involved in it because it’s a mass thing that the community is involved in […]. There’s a lot of value in it because it makes people feel like the council is theirs again.
Interviewing councillors and officers across the 19 councils, as well as analysing evidence from a survey of over 300 investors in the model, the report finds that CMIs:
- provide a new opportunity for councils to communicate with residents, helping them to better understand the role and impact of their local council and to strengthen public confidence and trust over time
- enable people to have a meaningful stake in improving the places they care about, fostering greater local participation in making improvements to place for residents and local businesses
- generates a stronger sense of optimism that, while some will move more quickly than others, through successive CMI launches councils can grow a pool of committed local investors
- provides a mechanism to build new relationships within and across local authorities and city-regions, helping to share knowledge and develop shared civic missions
- reflect a wider belief that councils who work with their residents are rewarded for responding visibly to the needs of a local area, boosting feelings of trust and hope in local government.
I’m keen for any investment I make to have a positive social and/or environmental impact. Council’s actions tend to be more visible than many companies, so they can also act as exemplars of good practice to local residents and businesses.
A key finding was that 59.2% of investors surveyed report feeling more optimistic about the future of the place they live as a result of investing in a CMI, with open-text responses to the survey reporting increasing feelings of trust and hope in local government because of a greater engagement in shared civic missions.
In his Foreword to the report, Neal Lawson, Director of the think tank Compass, called on the UK government to include CMIs in its devolution plans:
This extraordinary policy development must now be ramped up. As a living embodiment of the kind of public, private and political innovation carried out in Greater Manchester by its former highly successful Mayor, CMIs now need government backing to promote them and to regulate in favour of them, not least by ensuring that they are built into local planning applications as a method of investment […] It's time to put Community Municipal Investments firmly on the public policy map.
UK households hold £2.4 trillion in savings. Local authorities need long-term, affordable capital. CMIs could be the mechanism to connect the two – putting people’s money to work locally, building treasury resilience while revitalising civic life.
The report concludes with a Call to Action – asking UK Government and values-aligned organisations to help scale the model for the public good, offering a new way for devolved administrations to work in partnership with local people to deliver good growth in every postcode.
Read the full report ‘Making Places Better, Together: The Civic Impact of Community Municipal Investments’ here.
