Members of Hambleton District Council, which has maintained the third lowest council tax in the country, look set to approve launching a £40m commercial property investment arm to help protect frontline services.
The council’s cabinet will consider extending the amount of taxpayers’ money it uses to generate £600,000 annually as it seeks to become self-sufficient by 2020/21 and not rely on Government grants to support its budget.
Declining Government funding will lead to the council having to generate an extra £400,000 from April next year and £800,000 in 2022/23.
Leading councillors said while they are risk-averse, using public funds on projects which carry an element of risk would be key to underpinning their ten-year financial strategy.
The authority’s leaders say it is therefore crucial to acquire assets where a balance is struck between an acceptable return on investments – thought to be about four per cent – and a low risk of income shortfall.
A cabinet report states: “A robust decision-making process for making commercial investments would be devised to ensure that appropriate oversight, quality assurance and risk management is in place.”
Should councillors approve the strategy, the authority will follow neighbouring Darlington and North Yorkshire councils in seeking to fund services through property ventures.
Hambleton’s deputy leader, Councillor Peter Wilkinson, said the authority was acutely aware that it was dealing with public money.
He said following extensive checks on proposed ventures, the council would only invest in schemes considered to be low risk, such as the scheme it had already approved at the former Northallerton Prison site.
Cllr Wilkinson said the council had bought the southern side of the site as a long-term investment and would act as a landlord to a supermarket chain.
To ensure risk is minimised, the council would seek to invest across the UK and in different sectors, such as the industrial, warehousing and office sectors.
However, Cllr Wilkinson said: “If there was an opportunity outside Hambleton we would give it serious consideration, but Government policy seems to be changing which may stop local authorities from investing outside of their areas.”
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