Ipswich council boosts war chest to increase its investments in the town
- Credit: Archant
Ipswich council has increased its borrowing limit to £350m to allow the authority to make more investments in property in and around the town.
It can currently borrow up to £195m, but portfolio holder for finance Martin Cook told this week’s meeting of the authority meant increasing its borrowing facility would allow it to make more strategic investments in the town.
Last year the council set up a new body, Ipswich Borough Assets, to buy and new commercial properties in the town to produce a regular investment income.
Mr Cook said that as government grants to councils were phased out, investments like this became increasingly important to local authorities.
IBA is currently building a new headquarters building for law firm Birketts in Princes Street that will then be leased to the company on a long contract bringing a regular revenue stream for the borough.
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Mr Cook said the council was able to access low rates of interest to buy property and was being encouraged to invest in this way by the Conservative government.
He said: “Councils all over the country, like Bournemouth and Worcester which are run by the Conservatives are increasingly relying on this kind of investment.”
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The increase in the facility did not mean that the council would necessarily increase its borrowing – but it would leave flexibility if an opportunity came up. However any deal would have to be approved by its senior finance officer and meet strict rules.
Last year the council’s overall borrowings fell from £132m to just under £129m.
Opposition leader Ian Fisher said his group would be opposing the increase because it was gambling with public money. He pointed out that a report from the House of Commons’ Public Accounts Committee had highlighted the risk of councils investing in businesses which later failed.
His predecessor, Nadia Cenci, was also concerned: “Some investments, like the borough buying (its headquarters) Grafton House make good sense – they’re a no-brainer – but we cannot just allow an overall increase like this,” she said.
Mr Fisher called for a recorded vote. All the Labour and Liberal Democrat councillors backed the move while the Tories opposed it.