Local Government Finance – what goes around comes around

I was in London today for a meeting of the Executive of the County Councils’ Network at the Local Government Association in Smith Square.  As always, these meetings are an excellent chance to catch up with Leaders of other County Councils up and down the country.  They’re also a very effective way to ‘catch up’ on how other authorities are dealing with the Government’s various pressures and policy announcements.

Today we had a briefing on local government finance – a rabbit warren of indecypherable facts and figures at the best of times.  But something the briefing officer said made me think.

He said that Government across the world, keen to make best use of their financial reserves, were looking in some cases to buy Bonds.  The banks which controlled the bond markets were charging a premium for their products if they took the view that the Government looking to buy were not effectively controlling their budget deficits.  The very deficits which, in many cases, were caused or contributed to by the very banks who were now selling the bonds at a higher price.

What goes around comes around…

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