Council spends £5.7m in Basingstoke - while proposing free parking cut
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The council behind controversial plans to sell a treasured landmark and slash free parking is facing a backlash after spending £5.7million on a business park 140 miles away.
Babergh District Council snapped up the Basingstoke site using the £100m of taxpayer cash it has been investing in 18 commercial properties around the UK with sister council Mid Suffolk since 2017.
The council says the investments will bring in extra income.
But the purchase has jarred opposition groups, as it comes just weeks after Babergh put Sudbury community asset Belle Vue up for sale and proposed to cut free parking in Hadleigh and Sudbury.
Council bosses also plan to spend the remaining £25m on commercial property by March 31, despite the pandemic.
Leaders say the £4.5m income generated by investment arm CIFCO Capital Ltd in four years is helping the councils “weather the Covid-19 storm” - but community leaders questioned the rationale of such purchases in the face of proposed cutbacks back home.
Robert Lindsay, of Babergh’s Green group, said the £5.7m spent on Basingstoke could have gone towards revamping Belle Vue - a commercial investment project described as “essential” to Sudbury’s regeneration by the author of a recent council report.
“To me, this says there’s something very wrong with our overall strategy,” he said.
“We’ve got addicted almost to selling off the family silver and investing in frankly quite risky assets that we have no control of outside of our area.”
Council chiefs say they are still looking at a range of options for Belle Vue - originally bought for £6.5m to revamp into a hotel and restaurant but cancelled during Covid-19 - and are marketing it for sale to understand opportunities for it.
They said plans were announced in December to create an accessible entrance to Belle Vue Park as part of its regeneration, and added that where they can support ventures closer to home, they will.
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Bosses also said investments are carefully chosen to diversify the portfolio and mitigate risk.
Sudbury mayor Jack Owen, who fears proposed changes to reduce free parking will “damage” footfall to the market town, said: “There are all these things, like Belle Vue and parking charges, where they are counting their pennies and yet they go out and purchase a property outside the district.
“It seems quite strange to me. I know they see it as part of their future revenue, but if they are hard-up, this shouldn’t be happening.”
While council chiefs said changes to free parking in Sudbury and Hadleigh are partly about cost, they said they cannot be financed in the same way as CIFCO.
Revenue from introducing short-stay car parking charges can be used to fund maintenance and upkeep of council car parks, the council said.
CIFCO's investments are partly funded by loans from the Public Works Loan Board which can only be used for infrastructure projects and investments.
Babergh leader John Ward said that without income generated by CIFCO, the council could be forced to make cuts at a time when residents need it the most.
“The income we receive from the CIFCO portfolio is helping us to weather the storm through Covid-19, meaning we can continue to invest in local regeneration and meet the needs of our residents,” he added.
They also pointed out that not all of their investments are out of the area. On Tuesday, the councils also announced they had invested more than £40m in buying 230 new homes in their districts for low-income house-hunters.
£25m left to spend
The councils say they will spend the remaining £25m on commercial property in the next 10 weeks as March 31 was the original deadline for using the rest of the cash.
However John Matthiessen, Green opposition at Mid Suffolk, said this date is also when the Treasury proposes to ban councils from investing in this way.
Scores of authorities across England are doing the same, with Croydon declared bankrupt last summer after investing £545m in housing and commercial property.
“We consider this purchase to be a reckless and irresponsible move in face of the opposition of half the council, while also defying Government directive,” he said.
"A rush to spend the remaining £25m authorised ahead of the deadline on March 31, when the Government's current strong advice against this (type of investment) becomes a ban, puts more public money at risk."
Mid Suffolk leader Suzie Morley added: “CIFCO is continuing to make careful decisions about the properties it invests in, ensuring that there is a balance of risk with all its acquisitions: delivering a long-term income to support our council’s finances now – and building a portfolio of commercial property as a valuable investment for our residents and communities for years to come.”