Rethinking Redistribution (2/3): Bankrupt Local Councils

Introduction

Local councils facing Section 114 notices—effectively declaring bankruptcy—require structural, investment-led solutions rather than short-term bailouts or austerity. In this second in a series of AI-assisted articles, I argue that Regional Development Banks (RDBs) offer a strategic and outcomes-based framework to restore solvency while building long-term wellbeing through investment in QALY-linked infrastructure and services.

1. Convert Deficit Spending into Long-Term Investment via QALY Bonds

RDBs could help councils convert short-term overspending on reactive services into long-term capital investment via QALY-linked bonds. These would finance health-optimised housing or social infrastructure, with returns paid from future public sector savings.

2. Underwrite or Refinance Toxic Legacy Debt

RDBs could buy out and refinance councils’ high-interest legacy debt (e.g., LOBOs, PFIs) with low-interest, long-term loans tied to QALY improvements and community regeneration goals.

3. Enable Councils to Monetise Preventative Interventions

RDBs can fund preventative services—like youth support or mental health outreach—that generate long-term savings for the NHS, police, and social care. Councils receive “QALY dividends” from the cost savings.

4. Finance Local Income-Generating Assets

RDBs could fund municipally owned infrastructure (e.g., housing, green energy) that generates income while boosting local wellbeing. These assets could form the backbone of a council’s long-term fiscal recovery.

5. Establish “Local QALY Recovery Plans”

In place of austerity-based recovery plans, Section 114 councils would co-develop outcome-focused recovery strategies with RDBs and NHS partners. These plans would direct investment toward services that boost Quality Adjusted Life Years (QALYs).

6. Use RDBs to Match Councils with Blended Capital

RDBs can serve as brokers for councils, matching them with capital from NHS, pension funds, and social investors under a unified outcomes investment plan.

7. Embed QALY-GDP Principles in the Section 114 Process

Section 114 rules could be reformed to allow outcome-based investment and mandate recovery planning with measurable QALY and social impact metrics.

Benefits of the RDB-Based Model

Fiscal Recovery: Restructures debt and restores service capacity.

Investment-Led Growth: Turns fiscal crisis into a renewal opportunity.

Better Health Outcomes: Tackles root causes of overspending.

Shared Accountability: Aligns local institutions behind common goals.

Local Empowerment: Enables councils to invest, not just cut.

Policy Changes Required

Amend the Local Government Finance Act to permit outcome-based borrowing during fiscal crises.

Mandate Treasury to support and underwrite RDBs.

Establish a QALY Outcomes Regulator.

Enable NHS ICSs and DWP to pool budgets with councils for joint outcomes-based investment.

Conclusion

Regional Development Banks offer a powerful, regenerative approach to council insolvency. Instead of austerity, they provide a mechanism to restore fiscal health through long-term, QALY-driven investment in people and places. This is a practical pathway to a healthier, more resilient local government system.

Rethinking Redistribution (1/3): Getting Left Behind

 EXECUTIVE SUMMARY

This AI-assisted paper proposes a transformative economic model for the UK, integrating GDP (Gross Domestic Product) with QALY (Quality-Adjusted Life Years) to reframe wealth creation around harm reduction, wellbeing, and social resilience. This shift would directly link economic performance to human outcomes, redistribute investment through regional banks, and accelerate sustainable growth through a 10-point national strategy.

Current Challenge:

• The UK faces high inequality, regional stagnation, and growing health disparities.
• GDP growth alone no longer captures the public value of economic policy.

Proposed Solution:

• Introduce a GDP-QALY framework that links economic success with measurable improvements in health and well-being.
• Redistribute wealth via mandatory pension bond investment into regional public banks that fund local QALY-generating initiatives.

 

TECHNOCRATIC MECHANISMS

1. QALY-Indexed Public Investment Criteria

• Treasury Green Book reform to include QALY per £1bn as a core appraisal metric.
• Prioritise infrastructure, housing, and transport projects with highest health/wellbeing return.

2. QALY-Based Fiscal Transfers

• Adjust council and devolved authority budgets based on local improvements in healthy life expectancy, mental health, and chronic illness.

3. QALY-Linked Sovereign and Municipal Bonds

• Create investment instruments tied to QALY outcomes (e.g. youth wellbeing, elderly care, clean air).

4. QALY-Responsive Corporate Incentives

• Tax reliefs for businesses that demonstrate measurable well-being impact.

5. Wellbeing-Weighted Procurement and Tax Reform

• Prioritise social value in public contracts.
• Introduce VAT and NI adjustments based on QALY impact of goods/services.

6. Regional Pension Investment in Public Banks

• Replace some taxation with mandatory long-term investment in regional pension bonds funding local QALY-positive ventures.

 

 

SUPERCHARGING GROWTH

1. Establish a National Wellbeing Investment Bank: Co-invest in QALY-focused projects in housing, care, education, and health tech.

2. Education as a Human Capital Accelerator: Free lifelong learning tied to local employment and wellbeing metrics.

3. Green QALY Deal: Align decarbonisation with QALY creation: retrofits, active transport, green space.

4. Anchor Institutions as Local Growth Engines: NHS, universities, councils to direct local procurement and employment towards health-positive SMEs.

5. Tax Reform for Preventative Value: Incentivise upstream prevention and penalise QALY-negative market sectors.

6. Innovation Strategy for Public Good: Direct R&D toward dementia, loneliness, care innovation, and workplace wellbeing.

7. Devolve QALY Sovereignty: Allow regions to reinvest savings from reduced NHS and welfare burdens.

8. Monetise Prevention: Enable councils and charities to earn returns from harm reduction.

9. Universal Basic Services (UBS): Expand housing, transport, digital access, and mental health supports.

10. International Leadership on QALY Economics: Brand the UK as a global hub for wellbeing-based finance and policy.

 

CONCLUSIONS

The UK's future prosperity depends on redefining growth as both economic and human. By linking GDP to QALY outcomes, Britain can move from inequality-driven stagnation to a regenerative, health-centred economy. This framework empowers all levels of government, aligns public and private sectors with human flourishing, and places wellbeing at the heart of a 21st-century growth model.

 

STRATEGIC IMPLEMENTATION

(Can be conceptualised as an infographic with the following flow)

a) GDP-QALY Link Established

b) Treasury + Regional Banks Align Spending

c) Local Authorities Fund Health-Positive Projects

d) Businesses Become Incentivised for Social Value

e) Citizens See Real Returns in Life Quality

f) Economic Growth + QALY Increase Reported Quarterly

g) Global Brand for Inclusive Regenerative Growth