Dangers of property deals backfiring for councils - The Yorkshire Post says

THE extent of the difficulties faced by local authorities is perhaps under-appreciated by many council taxpayers until services they prize are cut in order to balance tightly-squeezed budgets.
One of the methods by which councils have sought to improve their fortunes in recent years is investing in property.One of the methods by which councils have sought to improve their fortunes in recent years is investing in property.
One of the methods by which councils have sought to improve their fortunes in recent years is investing in property.

Yet it is a deeply disturbing fact that some councils are in such dire financial straits that there is a very real possibility of them being unable to fulfil their statutory duties, or even going bankrupt.

One of the methods by which councils have sought to improve their fortunes in recent years is investing in property. But as today’s report by the Commons Public Accounts Committee reveals, this is a strategy fraught with risk that threatens to make matters worse.

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Under-performing – or even unwise – investments risk aggravating councils’ predicaments, raising the prospect of further damaging cuts to services or potentially landing taxpayers with huge bills.

This is a state of affairs that cannot continue to go unchecked. At the heart of councils’ problems is that they have been left too much to fend for themselves in trying to make ends meet by the Government, which has consistently cut central funding.

In response, there has been a big upsurge in property speculation, with investments increasing 14-fold. There are obvious dangers in this, especially now, when the commercial property market is likely to suffer as a result of the coronavirus crisis, which has already left local authority budgets even more stretched than usual.

Councils need to be extremely wary of property speculation. There are many in the private sector who can attest to how ruinously it can backfire.

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But ultimately, it is up to the Government to ensure that councils are not forced down this route in order to raise money. There has to be a much more realistic recognition of the pressures and demands on local authorities, and proper funding to meet them.

Editor’s note: first and foremost - and rarely have I written down these words with more sincerity - I hope this finds you well.

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Sincerely. Thank you.

James Mitchinson

Editor