PUBLISHED: 17:09 12 February 2018 | UPDATED: 17:09 12 February 2018
Ipswich borough leader David Ellesmere has insisted that the authority’s multi-million pound investment in commercial property in the town is safe despite government expressing fears about council spending.
Secretary of State for Local Government Sajid Javid said at the weekend that his department had fears about the level of borrowing that had been built up by some councils to buy property to provide them with a rental income.
Guidelines from his department said councils must take care to avoid “undue risk” when making investments – but stopped short of stopping them from spending money in this way.
The news comes just weeks after it was revealed that the borough had borrowed £56m for property investments, including £42m to buy the Anglia Retail Park on the edge of town.
Mr Ellesmere said: “We have taken great care with our investments. Our investments are nowhere near as large as some of those which have caused concern in Westminster.
“We make sure we don’t put all our eggs in one basket – we have invested in a retail park, in town centre retail sites, in a new office block and in a distribution centre.”
He pointed out that Ipswich Borough Assets, the council company which owns the properties, is the owner of Portman House – publisher of the EADT and Ipswich Star.
The government had encouraged councils to use their money and their ability to borrow at cheap rates to help boost its income. The property investment in Ipswich will pay for the council’s waste collection and sports services for a year.
Opposition Conservative leader Ian Fisher said he understood why the council had invested money in property – but he was concerned about the secretive way the deals had been done.
It had set up a council-owned company, Ipswich Borough Assets, which had no opposition councillors on its board.
He said: “The first we knew about the plans to buy the Anglia Retail Park was when the deal was done – there was no opportunity to raise concerns before it was too late.
“We need to be able to scrutinise and make concerns heard before it is too late to actually influence what is happening when such huge amounts of money are being committed.”