Plans for Cornwall to borrow then invest an extra £600m

There’s a busy day ahead for Cornwall Council’s cabinet tomorrow, not least the matter of approval to borrow as much as £600 million extra to put into a new Cornwall Investment Programme.

The vision of the Investment Programme is for the Council to invest now in house building, economic development and property in order to generate income from council tax, business rates and/or rental income in the future.

This extra borrowing will not (and can not) be used to subsidise existing overstretched services but to make investments in Cornwall’s infrastructure and housing over ten years.

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It’s being billed as a move away from a grant based economy to a model in which the Council ends up being the investor, the shareholder or landlord and then harvests the profits of these adventures which they can then spend on adult social care, potholes and toilets.

The Investment Programme for Cornwall, brainchild of the Chief Planner Phil Mason,  John Betty, the Strategic Director for Economic Growth and Development, will require a significant increase in the Council’s borrowing, almost doubling the existing capital programme.

Once approved, it will make the Council work in a very different way to how it has worked in the past.  For example in delivery of development, rather than just, say, dish out a grant for a new innovation centre to be built somewhere, it will fund the build itself and keep ownership of the building in public hands.

£200 million of the new borrowing will be used to deliver this administration’s key pledge of building 1000 council houses in four years. A further £89 million is earmarked to build commercial and industrial property which is hoped will attract investors and create new jobs.

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It is argued that by taking a commercial interest in development the Council will be able to improve the quality of new places and directly invest in the supporting social infrastructure such as health care facilities and schools. The Investment would also support a target to be the largest provider of affordable homes of all Council’s (we are currently 3rd).

The Cornwall Local Plan determines the quantity of new jobs and new homes needed in Cornwall between 2010 and 2030 is 38k and 52.5k respectively.  The Investment Programme will be a key driver in delivering these outcomes. The population of Cornwall is growing by about 4000 net additional people each year.

The council have promised that the investment will be focussed locally and using local businesses wherever possible to give the most benefit to the wider Cornwall economy.

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An annual business plan for the Investment Programme will be presented to council for approval.

A council report states

“Since austerity began in 2010 the Council has saved nearly £300m, and it is estimated that over the next four years the Council will have to find further savings of around £75m to balance the budget and keep on top of the demand for its services, price and pay inflation, and the continuation of the reduction in Government funding. Further one-off savings or funding will be needed to balance the budget in the short-term.

However, this process cannot continue indefinitely, there are significant challenges now in delivering statutory services such as social care to the people of Cornwall and the public are recognising the impact on our roads, verges and streets.

The Council cannot continue on the track of financial survival by just reducing services to the public and the intentions of the Council are to develop an Investment Programme for Cornwall in order that it may become financially sustainable in the future”