Ipswich council leader defends investing in business properties
- Credit: Archant
Ipswich council leader David Ellesmere has defended his authority’s decision to invest millions in commercial property around the town despite a warning from a senior MP that this could be gambling with public money.
Meg Hillier, who was chair of the House of Commons’ Public Accounts Committee until the general election told The Times newspaper that councils risked a repeat of the Icelandic banks crisis of 10 years ago by investing too heavily in commercial property.
Ipswich council has set up its own company to develop and manage a growing business property portfolio and is hoping to add to this over the next few years.
The Times has done a Freedom of Information request to councils across the country to find out how many were investing in property.
More than 350 are involved in these deals, prompting Ms Hillier to tell the paper: “The danger is a repeat of the Icelandic banking collapse, when councils were overexposed to one market. A crash in the value of offices or shopping centres could have a very big impact, with councils suddenly owning a lot of white elephants.”
However Mr Ellesmere said Ipswich council was determined to build up a balanced portfolio of business investments.
He said: “Our tenants are some of the most well-established companies in the area from a variety of different business sectors.
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“One of our largest investments at present is the new Birketts building currently going up in Princes Street. That will bring us a regular rental income.
“The fact is the money we are getting from the government is coming down all the time and if we did not make these kind of investments we would be looking to have to make dramatic cuts to the services we are able to provide for our residents.”
The borough is also currently planning to develop the former British Sugar site at Sproughton which is just outside its boundary but is set to become a major new business park for the area.
It has also bought land at the Waterfront which will also be developed for both business and residential development over the next decade – bringing in a rental income or eventually being sold at a profit for the authority.