Fears over Havant '˜Tory casino' plan to borrow millions and grow property empire

Borough officials have been given the green light to explore the property market and consider taking out big loans from government banks to snap up assets they can make a return on.

Havant has already built up a £6m property empire funded through its general fund and reserves.

But as government funds start to vanish, the council has decided it has to borrow money to bankroll the scheme, ensuring services survive.

Yet critics fear the initiative is too risky – and will see the council loaded up with debt.

Havant Labour councillor Beryl Francis said: ‘The idea is that officers can draw down up to £10m at a time and use it to invest in whatever they think might be profitable.

‘The investments can be anywhere. This is causing considerable anxiety among some councillors.

‘If there should be instability in the property or money markets, the people of Havant might find themselves deeply in debt.

‘There should be some sort of ethical criteria.’

Addressing the full council, Cllr John Perry, Havant Ukip leader, said: ‘I am very concerned about the Conservative Council Casino.

‘You want to borrow at 0.5 per cent, and make a five per cent return on £10m a year, but borrowing short and investing long is a well-recognised dangerous financial strategy.’

He added: ‘Remember, we are not a specialist property investment company, the gearing you are proposing is risky and potentially posing an existential threat to our own council.

‘How certain are you that the Conservative council casino will be a success?

‘Will you re-mortgage your expensive owned houses and under-write a five per cent return guarantee to share surpluses and deficits, above five per cent, equally with our council?

Havant leader, Cllr Mike Cheshire, said loans of up to £10m would be considered, but ‘it would depend on the return, where the property is and dependent on the yield.’

Explaining the strategy, Cllr Cheshire said: ‘Our income from the government is reducing year on year; in 2020 it will be zero. So that’s the reason we have to start borrowing. What we don’t want to do is run down our reserves to zero.

‘If there is a potential income stream outside of the borough, we will do it, but our preference will be to invest in the borough, particularly if it would improve our housing and skill bases, to improve the lives of people in Havant.’