Half of councils looking to invest in commercial properties

More than half of councils in England are looking to invest in commercial properties to replace money lost from central government, according to a new survey.

The 2019 State of Local Government Finance Survey by the Local Government Information Unit think tank and the Municipal Journal reveals 55% of councils are considering buying investment properties and using them as a source of income.

Around three quarters (73%) are considering investing in local housing developments and 55% are considering selling off assets.

And just under a third (28%) are considering investing in energy projects as a source of income.

The survey also reveals the majority of councils (52%) have increased borrowing levels in order to invest over the past five years.

And 60% of respondents said they believe core council services will at some point become reliant on income from commercial investments.

‘With more cuts ahead, local councils have no option but to take drastic measures to make ends meet,’ said LGiU chief executive, Jonathan Carr-West.

‘In the future care for the elderly and vulnerable children could be funded from shopping centre investments and car parks, which carries significant risk if the economy tanks,’ he added.

‘Now more than ever do we need a thriving, resilient local government sector to weather the storm of national uncertainty, but years of chronic under-funding has left local government on life support.’

Local authorities have already seen their central funding reduced, on average, by 40%.

Respondents to the survey admitted they would be further reducing activity in arts and culture (46%), parks and leisure activities (45%), roads (38%), libraries (32%) waste collection (22%) and recycling (11%).

Services for vulnerable people are also facing cuts, with councils planning to reduce activity in adult social care (29%), children’s care services (24%), special education and disability support (16%), homelessness support (11%) and funding for local Citizens’ Advice Bureaus (18%).

‘If central government is serious about tackling the housing crisis and rebuilding our communities after Brexit, they will need to rethink local government funding – fast,’ added Municipal Journal editor, Heather Jameson.

The full 2019 State of Local Government Finance Survey is available to read here.