Councils such as Wirral have been warned about the risks of putting public money into commercial property deals by the organisation that represents public finance accountants.
With Wirral Council exploring deals with commercial partners to build a golf resort in Hoylake as well as transferring other council assets to a new ‘Growth Company’, the warning has led to requests for an urgent report to the Council’s Audit & Risk Management Committee.
Cllr. Jeff Green said: “I am asking for an urgent report into the risk that these decisions will place on the council and the taxpayer if they fail. Labour’s desire to hand over assets while taking on the risks for these joint venture companies could be a recipe for disaster for taxpayers in Wirral.”
The warning follows concerns about the practice of councils borrowing to invest in commercial property disproportionately to their resources.
CIPFA highlighted Government guidance that “local authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of extra sums borrowed.”