Mid Suffolk and Babergh councils plan to borrow millions to inject into controversial CIFCO property investment enterprise
An extra £25 million could be pumped into a council’s controversial property investment arm if budget proposals get the go-ahead.
Mid Suffolk District Council wants to borrow the extra cash to inject into its CIFCO commercial property enterprise over the next three years, on top of the £25 million it has already invested.
Babergh District Council could invest the same sum, in a move which could generate an additional £435,000 per council over three years.
But Mid Suffolk councillors have expressed concern over the plan.
The draft general fund budget 2019/20 and four-year outlook was approved by cabinet at Mid Suffolk’s meeting on Monday and was due to be discussed by Babergh’s cabinet yesterday. It will then be considered by the overview and scrutiny committee before going to full council.
The budget is based on a two per cent Council Tax increase – equating to £3.26 a year extra for a band D property.
Cllr Andrew Stringer, Green Party, said: “We are obviously seriously concerned that we are putting at risk even more huge sums of borrowed public money, where the majority is likely to be invested outside of Mid Suffolk.
“While we acknowledge that councils need to address falling funding from central government, we should invest in our local housing needs first.”
The budget draft also includes a proposal to transfer £1.6 million into a new ‘commercial risk management reserve’ which, according to Mid Suffolk, would ‘mitigate any future risks associated with the level of commercial investment and development that the council has or will be investing in’.
Cllr Penny Otton, Liberal Democrat group leader, said: “How can the administration justify putting £1.6 million into a corporate risk reserve and then propose putting the Council Tax up?
“Year on year we are being told that the Government grant is to reduce and that is the case, but this is constant reduction in services to the community when money is being put aside to offset any lack of income from the investments in retail premises, outside of the district.
“We have argued all along that these investments are not what public money should be used for.”
Mid Suffolk and Babergh’s joint investment firm CIFCO Capital Ltd has previously come under fire for investing outside Suffolk, however last month it announced it had bought its first asset in the county – a warehouse site in Ipswich. CIFCO also owns sites in Hemel Hempstead, Peterborough, Milton Keynes, Harlow and Brentwood.
Elsewhere in the proposed general fund budget, the council says savings/income of £5.1 million have been identified for 2019/20 and beyond, however this includes a £2.6 million reduction in contribution from the growth and efficiency fund for the Regal Theatre, in Stowmarket.
Between 2011-2019, the council said it had achieved £5.2 million in savings through shared services, efficiencies, use of technology and commercial opportunities.