17-03-2025
Councils begging for your savings isn't a net zero innovation – it's an embarrassment
In an attempt to plug the ever-increasing funding gap, bankrupt-adjacent local councils have dusted off the begging bowl and covered it in tinsel.
Under the guise of investment, Green-led Bristol has become the latest council to offer what smells like a voluntary council tax to fund responsibilities that should be met from their existing budgets.
Considering the rise in council tax may as well be an annual guarantee – with Bristol one of many councils this year imposing the maximum 4.99pc increase that can be demanded without triggering a referendum – one might argue residents should expect the LED lighting budget across council offices to be met by the thousands of pounds a year they pump into these coffers.
But in a demonstration of phenomenal gall these local bodies have launched their own Kickstarter for Councils, asking not only their residents, but anyone across the country, to foot the net zero bill – in exchange for below-market returns.
These green bonds can be found on Abundance Investment, a platform that facilitates these loans for a slice of the pie – 0.75pc of the total sum raised alongside an annual 0.2pc fee. The website proudly declares that it offers investments with councils 'in a solid financial position', despite Bristol councillors declaring just two months ago that the body faced bankruptcy if it can't close its £52m funding gap.
But Abundance also notes that councils can't go bankrupt, and that's just misinformation spread by 'the media'; councils only issue a Section 114 and may possibly delay your repayments. Technically true, but it doesn't entirely reassure when Tony Dyer, leader of Bristol City Council, himself used the word 'bankruptcy' multiple times in his statement on the matter in January.
But if this unique set-up means investing in councils has a significantly low risk, as the platform claims, why has it confirmed it prevented several councils from issuing these sorts of loans?
More unsettling still, buried in the small print is the revelation that none of this is covered by the Financial Services Compensation Scheme, meaning if Abundance goes bust, hey ho, there goes all your cash.
Understandably, you might be getting cold feet by now and thankfully Abundance offers a resale platform. They won't buy it off you, but you can put the bond up for sale on a peer-to-peer marketplace in the hopes somebody will take your poor-paying investment off your hands. How many are currently available for purchase? 13. Not exactly a vibrant community.
Okay, James, but these are one-off investments used to fund the future. Once repaid they'll certainly be consigned to history. Hammersmith & Fulham is on its third round of fundraising via this platform. Government doesn't have a great track record of abandoning forms of taxation once proven to work.
Now, despite all this, I do have sympathy with the council funding issue. They have been forced to take onto their books enormous swathes of spending that should be budgeted by central government, with care costs swallowing up gigantic sums of money before the local bodies are able to allocate a penny to collecting your bins.
But the answer cannot and must not be begging residents within and without their borders to add just a little more money for a little more time (you can 'invest' from as little as £5) and then once that cash has been returned, to ask for just a little more again for just a little longer. The platform even confirms that some investors have been generous enough to donate their interest payments back to the councils.
Right now you can find five-year cash Isa bonds paying more than the 4.2pc interest on offer from these green bonds, without any of the uncertainty – and coming with valuable FSCS protection.
Innovation means deterioration. So wrote The Telegraph's own Patrick Hutber decades ago, and the once-City editor's words ring as true as ever. This latest in a long line of papering over the cracks with something shiny stands as one of the most embarrassing.
