Planning and Housing

14.01.19

Southend council to gamble £20m on commercial property purchases in bid to replace government funding cuts

Southend council has put forward plans to stake £20m of its budget on the property market in order to replace the lost funding from central government.

In its draft budget proposal for 2019-20, Southend-on-Sea Borough Council unveiled £35.3m of new projects and set out how it will use capital to make up lost funding from the government grant, which the council says is being slashed by 42% in April.

The local authority’s plans include committing £20m for commercial property purchases over the next three years as Southend aims to build a property portfolio.

New investments have also been announced, such as £26.3m into improving roads and pavements, and an £18m investment into renovating Southend’s pier but the council needs to make an extra £4m following the government cuts.

The returns from purchases made in commercial property are invested back into council services, and will aim to prevent larger rises in council tax and cuts to jobs and services as seen at other councils across the country, especially when the government grant is cut completely, potentially next year.

Council investments like these have proved controversial in the past as they put public money at risk, and in November CIPFA publicly warned against local authority’s exposing public funds to “unnecessary or unquantified risk.”

CIPFA shared its concerns over the “acceleration of the practice of borrowing to invest in commercial property” and reminded councils that the prime objective of council’s investment activities is the security of funds.

Southend council leader John Lamb said: “We are not going to make a fly-by-night decision on the investments.

“This is done carefully to see if it worth investing and whether we will get a return, whether it makes sense and how the market is.

“If the government doesn’t want us to make these investments so we can secure our services then they must stump up the money to make sure we can do it through them.”

Over £20m is also being added to Southend council’s capital programme from 2021 to 2024 for investment in the council housing stock, which will be funded through the housing revenue account.

If all external funding and business cases are approved, Southend’s capital investment programme could be £229m for the period of 2019-20 to 2023-24.

Lamb added: “Many councils have made these investments over many years, we are doing it and we’ve got some very good investments.

“I think the actual investments we’ve made so far are showing us a good return.”

Most recently Tees Valley Combined Authority mayor Ben Houchen announced a £40m deal to bring Durham Tees Valley airport back into public ownership using the authority’s investment fund, but the buyout was criticised by some council leaders as risky and a “vanity project.”

Comments

There are no comments. Why not be the first?

Add your comment

 

public sector executive tv

more videos >

latest public sector news

Neath Port Talbot Council threatens to pull out of £1.3bn Swansea Bay City Deal

17/04/2019Neath Port Talbot Council threatens to pull out of £1.3bn Swansea Bay City Deal

A council has threatened to pull out of Swansea Bay’s £1.3bn city deal unless it starts delivering projects in the next six months. ... more >
Flintshire council takes over litter enforcement services from controversial Kingdom

17/04/2019Flintshire council takes over litter enforcement services from controversial Kingdom

Flintshire County Council has taken over litter enforcement services in the county and urged residents to “take responsibility” over ... more >
City council rejoins ICS after reforms agreed in privatisation and accountability row

17/04/2019City council rejoins ICS after reforms agreed in privatisation and accountability row

Nottingham City Council is to rejoin its local NHS integrated care system (ICS) after significant reforms were made to the way the system runs in... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >
Neath Port Talbot Council threatens to pull out of £1.3bn Swansea Bay City Deal

17/04/2019Neath Port Talbot Council threatens to pull out of £1.3bn Swansea Bay City Deal

A council has threatened to pull out of Swansea Bay’s £1.3bn city deal unless it starts delivering projects in the next six months. Neath Port Talbot Council asked the other auth... more >
Flintshire council takes over litter enforcement services from controversial Kingdom

17/04/2019Flintshire council takes over litter enforcement services from controversial Kingdom

Flintshire County Council has taken over litter enforcement services in the county and urged residents to “take responsibility” over waste after it cut ties with the controversy-hit K... more >

the raven's daily blog

Self-build builds potential for more and better homes

15/04/2019Self-build builds potential for more and better homes

The director of The Right to Build Task Force – which advises stakeholders on bringing on more custom and self-build homes – Mario Wolf, who is currently on secondment from the Ministry of Housing, Communities and Local Government, discusses challenges the public sector needs to engage with to deliver housing supply growth. In... more >
read more blog posts from 'the raven' >

comment

Connecting the North East

15/04/2019Connecting the North East

Cabinet member for economic regeneration at Northumberland County Council Richard Wearmouth outlines the plans to reintroduce passenger services ... more >
What about social care?

15/04/2019What about social care?

Glen Garrod, president of the Association of Directors of Adult Social Services (ADASS), outlines the challenges facing the social care workforce... more >
How public sector IT can exploit the last 'big things'

15/04/2019How public sector IT can exploit the last 'big things'

Martin Ferguson, director of policy and research at Socitm, outlines the technology-related trends to look out for in the public sector throughou... more >
Brexit's systemic fallout

15/04/2019Brexit's systemic fallout

The third in a trilogy of Brexit articles for PSE, Chris Painter, Professor Emeritus at Birmingham City University, considers the wider constitut... more >

interviews

Digital innovation in the public sector: The future is now

17/12/2018Digital innovation in the public sector: The future is now

One of the public sector’s key technology partners has recently welcomed a new member to its team. Matt Spencer, O2’s head of public ... more >
Artificial intelligence: the devil is in the data

17/12/2018Artificial intelligence: the devil is in the data

It’s no secret that the public sector and its service providers need to invest in technology to help make better use of their resources. Bu... more >
New Dorset Councils CEO on the creation of a new unitary: ‘This is going to be the right decision for Dorset’

05/11/2018New Dorset Councils CEO on the creation of a new unitary: ‘This is going to be the right decision for Dorset’

The new chief executive of one of the new unitary authorities in Dorset has outlined his approach to culture and work with employees, arguing tha... more >
Keeping the momentum of the Northern Powerhouse

15/10/2018Keeping the momentum of the Northern Powerhouse

On 6 September, the biggest decision-makers of the north joined forces to celebrate and debate how to drive innovation and improvement through th... more >

public sector focus

View all News