Basildon Conservatives vote against Labour's Treasury Management Strategy

by
Cllr Stuart Sullivan
Basildon Conservatives Spokesman for Resources

At the recent meeting of Full Council, the Conservative Group voted against the Labour-led Administration's Treasury Management Report. You can read it for yourselves here.

I cannot argue with the facts of the report – which is why we voted at the Policy and Resources Committee to put it to Council for full discussion with all elected members and with a report now finally in the name of the Leader of the Council rather than the officers.

"We believe Labour and their allies are exposing the Council - and the taxpayer - to increasing amounts of financial risk."

The Conservative Group does have significant concerns regarding the activities of the Administration that are detailed in the report, specifically regarding their operation of the Commercial Asset Acquisition Strategy. The Conservatives have, by and large, supported that strategy (after all, we initiated it) where we have felt it prudent to do so but, recently, we have had significant concerns and have voted against certain acquisitions because we believe Labour and their allies are stretching the boundaries of the strategy and are exposing the Council - and the taxpayer - to increasing amounts of financial risk.

Firstly, in respect of investment leases, which is mentioned in the report, this is effectively a means by which another party (usually an institutional investor) can lay off their risk by giving the lease of its tenants over to the Council and we then pay that party a rent. Our concern stems from the fact that one particular tenant mentioned in the report is a retailer. In the current climate, this carries a painfully obvious raised level of risk. It begs the question of why an institutional investor would wish to hand over the lease of such a tenant to the Council. We need only look at Arcadia, which has just gone bust (including famous names like Debenhams, a high street giant for over two centuries) to see the worrying picture that currently exists in the retail sector. Our concern is that this element of the asset acquisition strategy has increased our risk exposure. 

Another new element to the strategy is the Investment Lending Strategy, whereby the Council lends other institutions taxpayers' money for property development. In normal times, this could be a strategy we would support but the degree of uncertainty and volatility in the current property market is such that, when the strategy was presented to P&R back in July, Conservative councillors merely asked that we defer this for a year until the market had stabilised. This is not 'opposition for opposition's sake', or 'kicking the can down the road'; it is protecting Basildon taxpayers from property market volatility and risk. Yet, Labour ploughs ahead regardless.

"The Conservatives will be tabling a fully-costed Alternative Budget... We will set out our plans in full before the local elections in May."

In times such as these, it may well be that there is money to be made by calculated risk-taking and speculation but Basildon Council is not a venture capitalist hedge fund, it is a local authority with a responsibility to the taxpaying public and the Administration ought to be duty-bound to minimise the risk and speculation that it exposes public money to. Now is the time to show extra restraint and caution.

To be clear, the Conservatives are not against the Commercial Asset Acquisition Strategy. I gather that, since the meeting, the Labour Leader of the Council has stated on social media that our opposition to these investments would put a "£4m black hole into our budget". It is not clear where the Leader has conjured this fanciful figure from but it is perhaps just worth pointing out to him that, when he was in opposition, he did not support our introduction of the strategy. So, if we had not introduced it, the Council would not have the income we currently receive from it in the first place. Nevertheless, we are concerned that Labour are speculating on the investment lending strategy in a way that we believe is unwise. 

We do not want to end up like Croydon Council!

In his summing up at Full Council, the Leader went on to allege that Conservatives would need to put the Council Tax up by '23%'. This is another entirely concocted figure that the Leader appears to have produced off the top of his head, entirely from thin air. In any case, all will be revealed in February, at the budget-setting meeting, because the Conservative Opposition will be tabling another fully-costed Alternative Budget, just as we have done every year when we have been in Opposition; something the Labour Party never did, despite having full access to the officers and all the relevant information to enable them to do so. The Conservatives will set out our plans in full and will be doing so well in advance of the local elections in May, so every resident will be able to see our plans ahead of time and will know if Labour's dire warnings come true or if they are, as usual, just scaremongering nonsense.