Whiteman: Council investments must be more diverse

3 Jul 19

CIPFA chief executive Rob Whiteman raised concerns over a lack of diversity in council investments, at the annual Local Government Association conference today.

“Local government’s commercial investments are not very diversified – there are a lot of shopping centres,” he told delegates at the CIPFA fringe event.   

Whiteman expressed concern about the scale of investments in shopping centres at a time when high streets were struggling.

Chair of the Public Accounts Commitee Meg Hillier expressed a similar worry to PF last week when discussing her annual report, saying: “It takes just one sector to collapse, [such as] office space, and it could have a big hit on a council’s budget.”

High streets will become an increasingly important source of revenue for councils as the government is moving towards 75% business rates retention by 2021 from 50%. 

But Whiteman noted that some local authority commercial ventures have been successful and pointed to the acquisition of Stansted Airport by a group of councils in Manchester. 

The 10 metropolitan borough councils of Greater Manchester have invested in a three airports – East Midlands, Manchester and Stansted – through a Manchester Airport Holdings, a company joint-owned by the councils. 

Whiteman also suggested that the “status quo” around local audit would need to change and urged local government to be proactive in reforming the system. 

“Local government should probably have a narrative that the status quo needs to change – if we don’t central government will change it without our input,” he said.

Whiteman said he expects there to be “some degree” of oversight from central government if the audit function changes. 

Rokhsana Fiaz, mayor of Newham, at the same session, stressed the importance of analysing investment decisions.

Fiaz noted that when she became mayor last year she began investigating the council’s investments in controversial LOBO loans.

She said that her attention had been drawn to the issue of LOBOs by an external anti-debt campaign group and urged others to take a broader view of investments and listen to outside voices.

Fiaz claimed that by ending LOBO contracts early the council has managed to save £143m in future interest payments.

“Councils must look beyond the local government ecology,” Fiaz advised.

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