Fresh investment

As has been said, 21st-century problems cannot be solved by 20th-century solutions. As Bill Jamieson astutely noted, a very important observation was made by the Scottish Futures Trust (SFT) in its submission to the budget review. The SFT distinguished between short/medium term "finance" which is risky investment in development of productive assets - and medium/long term "funding" - which is low risk investment in productive assets.

I have been working with the Nordic Enterprise Trust (NET) to develop two simple but radical new partnership-based legal and financial tools.

Our capital partnership enables a new form of quasi-equity funding which is based upon direct investment in pools of (say) rental value or energy production. Since this investment involves neither repayment of debt nor compound interest it will be seen that it will drastically reduce financing costs.

The possibility exists to build upon the sort of municipal limited liability partnerships now routinely in use by the City of Glasgow by - for the first time - bringing investors within a partnership framework to create capital partnerships.

Not only may this enable a model for municipal development which is superior to the existing model, but it may also be used to refinance existing municipal debt - whether council or third sector, eg housing associations - and to release billions of pounds for use as a rolling pool of development finance.

NET's concepts are receiving increasing interest as the credit crunch shows no signs of improving, and we believe that the possibility is there to create a new and complementary 21st-century form of municipal equity, of which we feel sure Mr Kerevan would heartily approve.

CHRIS COOK

Grange East

Linlithgow