Backing for Uttlesford District Council's £100m investment plan despite fears over risk to public purse
PUBLISHED: 08:32 28 February 2019 | UPDATED: 08:43 28 February 2019
The £100million loan that Uttlesford District Council (UDC) intends to take out for property investment exposes residents to an "unacceptable financial risk that could more than double future Council Tax bills", councillors have said.
UDC agreed its budget for the next financial year on Thursday, but Residents for Uttlesford (R4U) says it does not support the investment strategy proposals and Saffron Walden Labour Party is calling for a “complete rethink” of the strategy.
Councillor Paul Fairhurst, an R4U district councillor, said: “UDC’s 2018 accounts failed to note a nasty surprise that has been hidden from residents, and we don’t like it. UDC borrowed £50m to buy a stake in Chesterford Research Park. The value of that property has been independently audited and has already dropped by £2.7million.
“When other costs are included the accounts show a total loss so far of £3.25million. Now in the 2019 budget UDC is looking to do it all over again, and this time wants to borrow £100million to invest in more commercial property speculation.”
Cllr Fairhurst says UDC has made risky choices by ignoring expert advice it was given.
“UDC is a provider of public services not a property speculator and it has shown it makes risky choices by ignoring the expert advice it was given,” he said. “It exposes the council and residents to huge financial losses as has happened in Northamptonshire.”
A government inspection into the Conservative-run Northamptonshire County Council in 2018 accused leaders of “weak budgetary control” after they exposed residents to £70m losses, forcing tax hikes and service cuts.
Saffron Walden Labour Party is also warning that Uttlesford is taking “major risks” by seeking to raise £100million in debt without a comprehensive investment strategy.
Speaking at the full council meeting on Thursday, spokesman Daniel Brett said: “The investment programme lacks a coherent strategy, ignores emerging risks, has no professional asset manager oversight and is focused on one asset – the Chesterford Research Park – which is in one niche sector and in one ward in the far north of the district.”
Councillor Alan Dean, Uttlesford Liberal Democrat leader, also said Conservative priorities were wrong.
“Tory Government cuts to councils are pushing Uttlesford into budgeting big, borrowed money for commercial investments, but the council has planned no new borrowing for building much needed social housing,” he said.
UDC agreed to go ahead with borrowing £100million, backed by the Conservative group. Three R4U councillors also voted in favour of the investment after it was agreed to set up an investment committee, create a balanced portfolio of investments and enforce ‘stricter controls’ on investment.
“It was approved by the Conservative majority, but after two years we have now forced their leader Howard Rolfe to commit to bring back a proper governance proposal for approval,” Cllr Fairhurst said.
Speaking after the meeting, Daniel Brett said: “Ultimately, we believe Uttlesford should approach other councils in Essex to build a £1billion wealth fund which would have more financial muscle and can afford the asset management expertise to deliver higher returns with risks properly hedged.”
Councillor Simon Howell, cabinet member for finance and administration at UDC, said an advisory panel, which will include external independent experts, would be established.
“The Conservative administration at Uttlesford is firmly of the view that further prudent investments are necessary to guarantee income,” Cllr Howell said. “The majority of neighbouring councils have long established investments that have been of great benefit to their residents.
“The Conservatives have managed UDC’s finances in a professional and successful manner for 12 years, we inherited a council from the Liberal Democrats that was on the verge of bankruptcy. Our Council Tax has only increased by 2.9 per cent in nine years but extra resources have been put into services and capital.
“Our finances are strong this year and next but then we must plan for more challenging circumstances - that is exactly what our medium term financial strategy is doing. To play politics with that is simply irresponsible.”
Councillors also agreed a 2.99 per cent increase in the district council’s share of Council Tax at the meeting on Thursday - this means the charge for a band D property will be £151.61.