Property investments are a cause for concern at just “two or three councils”, a senior Ministry of Housing, Communities & Local Government official has said.
Civil servants were pressed on how they were monitoring councils’ commercial property investments during a meeting of the housing, communities and local government select committee on Monday afternoon.
Recent research by The Bureau of Investigative Journalism, in conjunction with LGC, found the number of councils investing in assets they deemed “investment property” had more than doubled between 2015-16 and 2017-18, when 71 councils spent £1.8bn.
The practice has attracted criticism in some quarters and concern councils may be exposing themselves to too much risk.
Jo Farrar, director general for local government and public services, said: “There are only two or three local authorities we are worried about at the moment and that we are looking at. In general local authorities are acting responsibly.”
Asked how the ministry would judge responsible actions, its permanent secretary Ms Dawes said “scale” of investment relative to revenue budgets was “definitely one of them”.
“There are only one or two that we are aware of pushing the envelope further than the guidance,” she added.
Asked whether Spelthorne BC was “on your radar”, Ms Dawes said “They certainly have very high borrowing rates. I don’t want to comment particularly on individual councils.”
Ms Farrar added: “I think it’s more difficult now for authorities to borrow that scale so we are hoping to see a change in behaviour.”