A CONSULTATION paper issued by the Government’s Department for Communities and Local Government proposes a crackdown on local authorities borrowing money for investments in commercial property.

Warrington Borough Council has made (or proposed) two such major investments during 2017.

The first was a £200 million investment in Birchwood Business Park. The council’s stated objective was to generate future rental income.

The DCLG paper suggests that this constitutes ‘borrowing in advance of need’ and, as such, would be contrary to existing statutory guidance.

The second was a £30 million investment in Redwood Bank.

This has already attracted media comment as a result of the two co-founders of the bank – David Rowlands and his son Jonathan – being criticised in the High Court by a judge in an unrelated case concerning their business dealings.

Experts are quoted as saying that ‘Some councils – with little or no investment experience – are building exceptionally risky portfolios’.

We can but hope that they didn’t have Warrington in mind.