Babergh and Mid Suffolk councils defend investments after worry from retired City trader
- Credit: Archant
A retired City investor has warned that Suffolk councils’ attempts to boost their income by investing in property could come back to haunt them if there is another financial crash.
And in another move Suffolk-based peer Lord Marlesford has asked the government to ensure councils’ property investments are properly regulated.
Thomas Fellowes, from Barking, said their had been many cases when councils had got into difficulty after investing in property – and he was concerned that Mid Suffolk and Babergh councils had followed this lead and bought a number of buildings including Marks and Spencer in Brentwood, Caffe Nero and Wagamama in Peterborough, and car dealerships in Milton Keynes.
The rental paid for these buildings is used to support the falling income from council tax.
He said: “Investing in property requires great skill and I don’t see that councillors have that level of skill. We have seen problems with council investments before over the years.
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“I spent my working life in the City and I don’t think authorities like Babergh and Mid Suffolk should be risking council taxpayers money on this kind of investment.”
Mr Fellowes pointed out that in a reply to Lord Marlesford’s question about council investments, government minister Lord Bourne said new regulations meant that councils had to be fully transparent about their borrowing and investments – and had to be able to show they understood the risks involved.
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Gerard Brewster, Mid Suffolk District Council Cabinet Member for Economy, said: “I’d like to thank Mr Fellowes for raising these concerns: it is always right for our residents to speak up if any part of council policy concerns them, and I am happy to address them.
“In partnership with Babergh we have sought to make these commercial investments in order to generate income that will safeguard services in years to come. This decision was not taken lightly, and we are well aware of the questions raised around similar policies in other councils.
“To minimise the risks and boost the returns on these investments, we established CIFCO and appointed experienced non-executive directors, each with experience in the field of property market investment and delivery, to manage our investments and have committed to having all of these investments independently reviewed each financial year.
“We have also secured a wide ranging portfolio, so a poorly performing market in one area does not undermine our entire investment strategy.
“We take our responsibility for these funds very seriously and are working hard to ensure they have all the necessary scrutiny to mitigate the risks and maximise the returns we can invest in our communities.”