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In an effort to fund environmental improvements, a financially struggling council in London has initiated a crowdfunding campaign.
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In an effort to fund environmental improvements, a financially struggling council in London has initiated a crowdfunding campaign.

Due to significant reductions in government funding, a council in the southern region of London has requested that its inhabitants personally invest funds in order to construct cycle storage facilities, implement LED street lighting, and make environmentally-friendly improvements to schools and recreational facilities, with the potential for financial gain.

Due to a financial emergency affecting local governments in England, officials in Southwark are utilizing a crowdfunding effort in hopes of collecting £6m within the next six years to support environmental initiatives.

A solution has been devised to tackle the financial limitations while also addressing the urgent need to combat the climate crisis. The program aims to generate £1m in the next fiscal year by providing investors with a 4.6% profit.

Despite an additional £600 million from the government, the vast majority of English local authorities are still planning significant service cuts and potential council tax increases in order to stay financially stable.

Emily Hickson, the deputy cabinet member for green finance in Southwark’s Labour-run council, stated that this is the prevailing situation. She acknowledged that Southwark is facing the same challenges as other councils across the country, such as the shortage of funds from the central government and dealing with rising costs.

“We are currently profitable due to our focus on innovation.”

The program permits minimum investments of £5 and had collected over £50,000 in a matter of hours since it was introduced on Tuesday. It is available to both individuals and businesses, regardless of where they live, offering a fixed annual return of 4.6% over a period of five years.

Investors should be aware that there is a risk to their capital and they may experience partial or total loss of their invested funds.

According to data released by the Local Government Association, around 66% of councils in England are preparing to make reductions to local services in the coming year. These cuts may involve areas such as rubbish removal, road maintenance, library services, and recreational activities, as councils face challenges in balancing their budgets.

Due to decreased funding by the central government and increased inflation and demand for services, local councils are projected to experience a £4 billion deficit over the next two financial years, ending in 2024-25.

The data showed that 85% of local councils were preparing to implement cuts in order to maintain their financial budgets for the upcoming year.

The Southwark council announced that they must make cost reductions and streamline operations in order to fill a budget deficit of £6.7m for the next fiscal year due to growing demands on services and higher expenses. They are also aiming to implement the maximum allowable increase of 4.99% for council tax.

Since 2010, the council has experienced a decrease in government funding by over £146m in actual currency.

Earlier this month, Southwark faced criticism for removing shared areas and playgrounds for children in order to create space for new homes. This resulted in the new homes being left vacant and inaccessible as the council experienced budget shortages.

Abundance Investment is a financial platform that specializes in ethical and sustainable community investment projects. They will be responsible for managing the crowdfunding scheme of the local authority, which has been increasingly utilized by many English local authorities.

In 2020, Warrington council in Cheshire was the first to launch on the platform. Since then, nine other local authorities, such as West Berkshire, Camden, and Cotswold district council, have also utilized crowdfunding to meet their climate goals.

Hickson mentioned that the Southwark project would utilize a lower interest rate for the local government compared to borrowing from the public works loan board, which provides inexpensive long-term loans for community initiatives. Furthermore, it would allow for direct involvement of residents in the council’s efforts to address the climate emergency.

“It is rather small. It is not the solution that councils across the country will use to address their financial struggles,” remarked Hickson. “However, it should allow us to complete this task in a shorter period of time. Such projects are necessary.”

Source: theguardian.com