The two existing examples I know of are indeed very small: £1m each, 1.2% return, 5-year fixed-term bonds but with a non-guaranteed possibility of cashing out early (they’re managed by a peer-to-peer lending company, one of the good ones in my opinion). But I don’t see why they couldn’t be much larger. Yeah, people might prefer a guarantee of early withdrawal, though.
One big weakness of local savings bonds, though, from Labour’s point of view, is that wealthy regions would be able to raise more funds than poor regions. So the rich get richer.