A CASH-strapped council has become a supermarket landlord in a bid to make up for money it says it has lost in cuts to its government grant.
Earlier this year, Fareham Borough Council agreed to use £3m from its reserves to start looking at investments in commercial property.
And among its first acquisitions has been a convenience store for Sainsbury’s in the north of the county. The offer has been accepted and is expected to be completed in coming weeks.
The deal is expected to produce a return of six per cent for the council.
The council has also recently completed a deal to buy Clifton House on the Segensworth Business Park. It had been on the market for £1.7m, but the council is expecting a return on its investment of nine per cent.
Tory council leader, Councillor Sean Woodward said: ‘We spend about £50m a year on services and we only raise about £6m of that in council tax, so we always have that pressure on our revenue – the day-to-day expenditure.
‘We have relied historically on our investments to provide about £1.5m a year in interest, but, of course, for the past few years interest rates have been at an historic low, and even our good interest deals are now running out. We can no longer get a good return on conventional bank accounts so we have been looking at other investments.
‘And with the year-on-year cuts to our government grant, we need to find other ways to make up that shortfall.
‘That money can either sit in a bank earning about one per cent or it goes into property earning up to nine per cent and we can continue keeping the council tax down.’
Cllr Woodward has asked council officers to look into the possibility of releasing a further £3m to be used in a similar way.
Cllr Woodward added: ‘£3m is a lot to you or me, but we have reserves of about £30m, so I don’t think this is taking a risk with the taxpayers’ money.’
Lib Dem group leader, Cllr Paul Whittle, said his group were in support of the scheme, as long as ‘it’s done wisely’.
He added: ‘We’ve been suggesting a similar thing for a number of years.
‘Fareham Borough Council is, through judicious management, and unlike a lot of councils, in the position of having a fair reserve.’