Spelthorne BC is to shift the focus of its investment strategy and is not planning any more major commercial property purchases, council papers reveal.
The move follows questions over the scale of the council’s borrowing to fund its £933m property portfolio, relative to its turnover.
A new Capital Strategy, due to go before cabinet on Wednesday, says the portfolio will deliver £9.8m to help fund services in 2019-20, about half of the council’s total budget. The strategy says the council has “achieved our objective of significantly boosting our income to support provision of services” which has avoided cuts to non-statutory services such as meals-on-wheels and day centres and allowed the maintenance of more regular waste collection.
The document says: “The focus of the council was previously to generate revenue in order to safeguard its basic services. The focus now is on providing affordable housing.”
The council hopes to build up to 600 homes over the next five years, equivalent to a fifth of the housing need in its new local plan.
The council borrowed £393m in 2018-19 to fund its commercial property investments, including office buildings in Slough, Reading and Uxbridge, but is only anticipating borrowing £119m over the next two years.
Last month Ministry of Housing, Communities & Local Government permanent secretary Melanie Dawes said she was concerned about the commercial investments of “one or two” councils. Asked whether one of those was Spelthorne she said they “certainly have very high borrowing rates”.