Warning to council as it embarks on £50m investment strategy
“It will cost us and taxpayers if we get this wrong," councillor says
WEST Berkshire Council has been urged to take caution as it looks to invest up to £50m in commercial property.
The district council is embarking on the venture to generate new revenue streams as it battles against a huge reduction in its grant from the Government.
In total, the council is looking to put up to £50m into commercial property assets, with a minimum investment of £25m to be funded through capital borrowed from the Public Works Loan Board (PWLB).
Council documents say that the move would offer £463,997 in surplus income, based on the minimum £25m investment and £954,280 on the full £50m.
Both figures are based on a six-per-cent yield.
Councillors discussed the strategy at a meeting last week, where Dominic Boeck (Con, Aldermaston) said the “innovative initiative” would “provide secure income streams in the future”.
But concern came from fellow Conservative Alan Law (Con, Basildon).
He said: “I’m going to support this in principle only.
“It’s a great idea, but we as a council have little or no experience of being commercial property developers or investors.
“It’s a good idea in principle and I support it, but I caution you on the execution.
“It will cost us and taxpayers if we get this wrong.”
The council is seeking to replicate models adopted by other local authorities across the country.
A similar scheme by Bracknell Forest Council has seen the authority invest £40m, with £15m invested so far this year.
The council’s sudden drive to dip its toes in the investment market was highlighted by the deputy leader of the Liberal Democrat opposition, Alan Macro (Theale).
“We welcome the proposal for the council to generate some additional income, however this council is a bit late to the party,” Mr Macro said. “Many councils have been doing this for some time.”
He said there was a danger that the Government could make the scheme difficult by stopping the council from borrowing from the PWLB.
Mr Macro added it was a shame that the council had not seized the opportunity to invest in the redevelopment of Market Street as a way to generate additional income.
The controversial redevelopment saw the land, valued at £3.9m at the time, handed over to developer Grainger for no fee.
It will see 232 homes built on the site, with just 13 being affordable.
James Fredrickson (Con, Victoria) responded by saying that some parish councils in the district had raided the PWLB and that “caution and care” would be required by the district council.
He said that “one of the most significant changes in this council’s history” was necessary to tackle the reduction in money from central government – a move which has led to the council having millions cut from its budget year on year.
“Many of us have had to make difficult decisions and pick the lesser of two evils,” Mr Fredrickson said.
“This is the opposite of that.
“This is about protecting and bolstering services.
“For that reason we should be backing it this evening.”
Newly-appointed leader Graham Jones (Con, Lambourn Valley) added: “Yes, we are not the first authority to go down this route, but it’s often the second mouse that gets the cheese.
“This is about authority to act. It’s about generating income to protect council services into the future.
“I do believe we have to proceed with caution and this is something that I ask we do.”
