This report from the New Local Government Network warns that deep cuts to public spending risks creating a “tsunami of a public sector recession”

NLGN argues that inadequate investment into public infrastructure will hit investment in road and rail projects, housing, new school buildings and hamper the modernisation of public services.

It calls for future Governments to limit the reduction in spending for infrastructure projects such as new roads and public buildings. It also suggests that local authorities should be given new revenue raising powers including more user charging and borrowing against their financial reserve.

The report sets out how local councils could raise alternative forms of infrastructure investment in a scenario where the Treasury begins to clamp down on orthodox capital expenditure. NLGN suggests that local authorities should consider going directly to capital markets through bond issuance, potentially explore alternative revenue raising powers including the workplace parking levy once the recession ends, and that councils should rapidly explore the potential to apply their own financial reserves more intelligently.

CAPITAL CONTINGENCIES is available from www.nlgn.org