Monday 1 June 2020

Council commercial investment concerns

I see that the Government has expressed concern about the policy pursued by some local councils of investing council funds in the acquisition of commercial properties which, as a result of the effects of the virus, are not performing as originally anticipated.
This comes as no great surprise.

As long ago a blog item on this site posted on 27th January 2016 under the title “Speculation on Sea” I expressed my concern at the decision of the Rainbow Alliance to pursue a speculative policy of seeking to acquire commercial property to deliver income streams and capital appreciation and noted that the latest budget proposed the allocation of £6M over the next 3 years providing a pot for this purpose.

This policy was being driven by the then Leader Independent Ron Woodley who in my time on the Council was never shy to advise us of his prowess in all things financial.- something which was rarely apparent from the policies he pursued!

As I commented in January 2016 “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….”

Well perhaps not this time with Ron the current Deputy Leader of the Council. I do not know the extent to which Ron’s policy was implemented and how Council investments have been hit, however this needs to be made clear to the public over the coming months as the situation develops and the Government’s current concern is clearly well founded.