PORTSMOUTH City Council borrowed tens of millions of pounds the day after the EU referendum to expand its growing property empire.
Public records show the local authority got a loan of £30m from the banks the day after the nation voted in favour of Brexit in June.
What we have been doing is bringing in a more business-focused approach to running the city, bringing in more investments, building the economy and securing more jobs.Councillor Donna Jones, leader of Portsmouth City Council
Tory council boss Donna Jones, who authorised the move, said she wanted to take advantage of low interest rates triggered by the EU result to buy more properties that will make the council money through annual rents.
The loan bumped up the size of the council’s property investment fund to £112m, a pot of borrowed money used to so far buy five assets – the most recent being a Mercedes-Benz showroom in Eastleigh for £8.75m.
Councillor Jones says the council is proving why it has become one of the most ‘entrepreneurial’ local authorities in the country.
But political opponents are concerned at the amount of debt the council is racking up – and how taxpayers will be burdened with paying it all back.
Cllr Gerald Vernon-Jackson, Portsmouth Lib Dem leader and former council leader, said: ‘My concern arises over the level of debt the council is building up.
‘It’s pretty strange for a council to go into the world of property speculation in other parts of the country.
‘The council is not a specialist, in that it doesn’t have specialist knowledge in that field. But more money is being borrowed and it’s the people of Portsmouth who will have to pay it back if things go wrong.
‘Borrowing, when interest rates are low, is a sensible thing to do. The question is, should we be borrowing the money?’
Cllr Jones has already said the council is expected to make £3m a year from its investments.
Rents coming in will cover borrowing costs and provide the council with a profit, which Cllr Jones will use to pay for ‘statutory and non-statutory council services.’
Criticising her opponents, Cllr Jones said: ‘All the Lib Dems seemed to know what to do was spend money on their own political whim, to make them more popular.
‘What we have been doing is bringing in a more business-focused approach to running the city, bringing in more investments, building the economy and securing more jobs. While some councils are closing libraries, museums and stopping weekly bin collections, we have been able to protect those things.’
Cllr Jones says £4.3m of the £9m the council needs to slash from its budget next year will come through ‘income generation’ schemes, including another £750,000 through the Emirates Spinnaker Tower sponsorship deal.