Finance chiefs sound alarm over airport investments

Finance chiefs have warned that some councils with investments in airports and business parks could face a loss of income as the coronavirus pandemic continues to wreck the economy.

Speaking yesterday (11 May) in front of the public accounts committee, the chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA), Rob Whiteman admitted they were ‘quite worried’ about a ‘few’ councils, which were ‘were overexposed through borrowing for commercial purposes’.

The cross-party group of MPs is currently investigating the scale of councils investing in commercial properties, like business parks and shopping centres.

The investigation follows a report by the National Audit Office, which was published in February and revealed that councils in England spent £6.6bn on property investments between 2016 and 2019.

Speaking in front of the committee yesterday, Mr Whiteman mentioned a ‘new concern actually that didn’t exist before COVID-19’, which was around some long-standing investments.

‘They might not be funded through borrowing, but through revenue reserves – like airports or arenas – which have been jewels in the crown for many local authorities.

‘Actually, they may be a concern now, as well for those councils. I think we were worried about our lack of income from commercial investments on retail parks offices, etc.

‘But probably the concern will be a bit wider, because there are some investments like airports, which were not a concern before this crisis, but will be now,’ said Mr Whiteman. ‘But I would remind the committee that some of those investments were not funded through borrowing.’

The leader of South Hams District Council, Cllr Judy Pearce, also gave evidence to the committee and said her local authority relies ‘very heavily on earning money in order to be able to spend it’.

‘We have been heavily restricted over the years by not being able to put up council tax by more than five pounds or 2.99%, and the result of that is that we are very pushed for cash and we have had to put up the cash we can earn in all quarters in order to balance our books, and we have to balance the books by the end of the year.

‘Now we’ve taken a huge hit on all our earning capacity since the beginning of the emergency and there’s no clear route out of this yet, as to when we shall start being able to sit, or we should be able to start charging again.’

Photo Credit – Pdimaria (Pixabay)