The Rainbow Alliance in charge at Southend Council had previously confirmed its intention to pursue a speculative policy of seeking to acquire commercial property to deliver income streams and capital appreciation and the latest budget proposes the allocation of £6M over the next 3 years providing a pot for this purpose.
It is being funded by increased borrowing and adds to a further figure of £1M for the possible acquisition of properties in Queensway.
Ignoring the irony of this policy bearing in mind council leader Ron Woodley’s previous stance on borrowing this policy continues to raise major concerns.
If properties are in Southend they will be added to an existing range of properties owned by the Council in the Town and make the council’s finances increasingly dependent on the strength of the market in this specific areas. It is a policy based on putting all your eggs in one basket! If properties are sought outside the Town then they are in areas of which the Council, its members and officers have no specific knowledge and may be unaware of the resulting perils.
Effective property acquisition often requires quick and reactive decisions to be taken and is completely unsuited to the restraints imposed on a democratically accountable organisation like SBC.
Council officers are generally very able and dedicated in the areas they are qualified in – however commercial property acquisition in circumstances requiring good returns on both an income and capital basis is generally not one of them.
If the market slumps and the Council is sitting on the wrong investments the effect could be substantial – the problem is that by the time that happens those responsible for this decision will be long gone leaving a future Conservative administration to pick up the pieces as normal.
I fully accept that the Council needs to identify and develop alternative income streams wherever possible but it does not seem to me that the risks of this policy has been fully highlighted to the public.
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