1. Commercial expertise driving value and efficiency in local public services Local authority collective agency Mark Luntley

2. 2 Today Why What we’ve done to date Headline conclusions Our planned next steps

3. 3 Why PWLB International lessons Stimulate market/reduce costs More than money Self confident sector Small and large councils

4. 4 Steps Specialist advisors Political oversight Technical reference City discussions Sector consultation

5. 5 Approach 5 case model Different options considered Detailed evaluation Cross guarantees Capitalisation

6. 6 Vision AAA/Aaa Values: Straightforward Transparent Collective Efficient

7. 7 Drivers Stimulate market Educate bond investors Support principles of prudential borrowing Looking outwards to other nations An alternative to PWLB – but mixed economy

8. 8 International models

9. 9 Developing a model Capitalisation not cross guarantees Uplift on individual ratings Asset quality Liquidity Rules Diversity of councils

10. 10 Headline conclusions

11. 11 Headline conclusions 97% of sample councils interested “in principle” AAA/Aaa possible Lend at 0.7% to 0.8% above gilts @£2.5m/ < two years to establish Between £2m and £4m a year to operate (depending on complexity) 25% market share

12. 12 LGCA structure

13. 13 Bond prices

14. 14 Risks – set-up Government policy changes City Lack of sector interest (or waiting for another to lead) Set-up costs Alternatives emerge

15. 15 Risks - operational Changes in prudential code Reduced demand Prudential code changes PWLB changes Actions of individual council(s)

16. 16 What now? LGA Exec agreed (Jan ‘12) Six months: Detailed consultation on proposals Determine sector/investor interest Liaison with Government OJEU procurement Detail of arrangements

17. 17 Aim – August 2012 Lead councils + funding in place Shadow board Agreement on shape of agency Clear steer from government Advisors identified Rating?

18. 18 Questions? Mark Luntley 07909 962193 0207 664 3336 mark.luntley@local.gov.uk