Olson warns on council borrowing

Godfrey Olson OBE

Councillor Godfrey Olson, leader of the Conservative group on Eastleigh Council has voiced doubts over council borrowing and local Liberal Democrats plans to fund a government grant shortfall through efficiencies and property rental.

Responding to Council leader Keith House’s budget speech last Thursday, Eastleigh’s respected elder statesman, twice Mayor of Eastleigh and an OBE,  expressed his concern over the council’s growing debt mountain saying:

“Efficiencies and savings can’t go on forever”

“What I am concerned about is that this authority was a debt free authority at one time – we sold all the council houses and got £47 million. We (have) changed from being a debt free authority to one that borrows.”

“I think the borrowing limit that has been approved by this council now totals £86 million, an enormous borrowing limit. I know some of the assets we have bought are showing a return but for an authority of our size to borrow that sort of money I think is excessive.”

Cllr Olson who once owned Eastleigh’s largest chain of Estate Agents and valuers – with its own lettings business – warned the council on the fickle, cyclic nature of the property rental market:

“It’s all very well when the economic situation is going in the right direction. No one can predict what the future may hold for us, we may have failing tenants, you may have a fall in property prices –you may be experiencing an income when all the properties are let – if they become vacant you don’t get the income and if property prices fall and we do need to go to the market with them, then we may not get the money back that we perhaps paid.”

“We are going to see a rise in interest rates and our borrowing rate is going to increase”

“We shall see one or almost certainly two rises in interest rates and that is going to have an effect on our borrowing and we have to look at that to see if we are still going to get a return”.

“We‘ve only got a net annual budget of £12 million and I think that if we go to the (borrowing) limit that is proposed we are going to be over exposed and in business one doesn’t want to expose oneself in a way that could almost be reckless or the chickens might come home to roost at some time”

“Our main function is to provide services not to act as a property company.”

“I looked at presentation we had a little while ago on investments of £31,156,000 there was a net surplus £416,000 which equates to a 1.35% return.”

“In my mind that’s not a very good return for the money and certainly if I was investing my money I would want to see a better return than that. I only hope we see things improve- with interest rates going up I question it.”

Councillor Olson also queried the cost of the plan to install solar panels on public building pointing out it would cost £1 million to install plus £60K from revenue.

He wondered:

“How good an investment it really is The principle is good but I wonder about the practice”

The Conservative leader also called for:

  • revenue costs to arts projects like The Point to be reviewed
  • A freeze on service costs such as parking and leisure which have been above inflation
  • More help for small businesses
  • Council to pull out of Rose Bowl hotel deal

  7 comments for “Olson warns on council borrowing

  1. March 2, 2011 at 2:15 am

    It’s not often I find myself glued to a story about EBC but when a councillor has clearly done his homework and has the experience and knowlege to backup his statements you have to sit up and take an interest..

    I am also glad to see that at last some members of this council can hear the residents wishes and speaks out about such things as;

    * revenue costs to arts projects like The Point to be reviewed

    * A freeze on service costs such as parking and leisure which have been above inflation

    * More help for small businesses

    * Council to pull out of Rose Bowl hotel deal

    If I had a hat I would take it off to you sir. Well done and thank you for understanding the wishes of this Borough. Its about time more followed your brave lead.

    Hip Hip..

    Matthew Myatt
    Professional Freelance Photographer
    British Association of Journalists (London-1671)
    SKYPE mattymyatt
    Linked-in Matthew Myatt

  2. Graham Hunter
    March 2, 2011 at 11:09 am

    Godfrey is a respected local politician. And has a knack of hitting the nail on the head.
    It is very worrying that Lib Dems on EBC seem to want to gamble with tax payers money, at a time when they should be doing exactly the opposite. Its a bit like getiing a credit card with a huge rediculous Credit Limit, then blowing the lot, on things you cannot afford, then stuggling to pay back a massive debt. In this case the Council Tax Payers picking up this debt.

    Of course they could always pawn the Council Offices, Point, Berry etc etc
    This is surely missmanagement of funds.

  3. Cllr Brian Norgate
    March 3, 2011 at 1:19 pm

    The Labour Councillors supported most of the borrowing as the contracts give a good return
    for the money EBC borrowed from the Labour Government during the good times. Even I have to admit some of the deals done by Keith House are good for EBC, certainly not all.

    EBC has purchased property and land for development in a responsible way; I support the feasibility of moving the Civic offices into the town centre but the costings for rebuilding the current civic centre compared to the potential new buildings have not been fully declared yet by EBC.

    It is your rate money after all, not much to ask is it Keith.

    EBC should have brought the Nuance house site (now Hampshire House) in Southampton Road for
    £10million which HCC brought cheaply when compared to the Liabilities we are facing should EBC move into one or another sites in the Town centre. That’s where the Civic offices should be.

    At the time Hampshire house was up for sale EBC were wasting more time and money on the Chickenhall link road, EBC were over optimistic and the land EBC brought next for this to happen appears to be tied up with not much return as Godfrey Olsen correctly states.

    Two years ago Keith House in his budget statement said if all his Gold star projects
    were realised EBC borrowing could rise to £146million, this of course included the Rose Bowl, much of this information is of course exempt, Lucky for Keith I say, but it will come out one day then people might agree with Godfrey over some of his concerns.

    We are in favour of the Chickenhall link road now called Riverside so you will forget the c*ck up negotiations with Jim Clark and St Modwen, BAA, Fords, Pirellis and other parties but this Council has blown it, the chance to develop the airport and associated area with quality housing and quality jobs related to the airport and railways was blown by the council run by Keith House.

    Like Godfrey I attended the resources meeting where we discussed the Rose Bowl, it was a shame
    the new road to and from the Rose Bowl via the M27 didn’t happen and that wasn’t Keith Houses fault – that was HCC.

    I would support the Rose Bowl deal if the financial package was right for the ratepayers,

    The hotel and package is well planned and we took advice from a senior hotelier running
    Hotels here and in Europe,

    His recommendation was if we gave a deal near the Allied Irish bank offer it would be worthwhile. He didn’t like the current financial plan and told us to avoid it like the plague.

    I have always voted against the current Rose Bowl financial package and asked questions at EBC full council, I understand Keith House promised the Rose Bowl deal would be back for another vote for councillors in December 2010 or early February 2011, that hasn’t happened – and we think we know why.

    Perhaps Keith can explain via your website.

    (Yes please! –ed )

    One of the reasons there is confusion is none of the EBC Cabinet members have ever put in a written statement so councillors can ask them questions,

    It’s one of Keith Houses sense of humour things,

    Hard to hit a fast moving target.

    It doesn’t work, it just means everyone gets confused what the real situation is and you end up with Godfrey’s concerns which I share and have exposed in my written questions at full council.

  4. March 3, 2011 at 4:19 pm

    It is nice to see that at last that both Labour and the Conservatives are in agreement over the serious problems this Borough is facing under the Lib Dems.

    Both Cllr. Norgate and Cllr. Olsen have restored my faith in local politics by speaking out with well thought-out and researched arguments over concerns for the LOCAL people in the Borough of Eastleigh.

    Now if we could only get Cllr Norgate to stop being in love with The Point and everything it does we would really have a strong and coordinated opposition in the Borough.

  5. March 4, 2011 at 9:29 am

    Mathew, I like most other Councillors pay for our tickets at the Point, The venue and staff
    there are great and i support the Point.

    Reducing the subsidy to a cost neutral position
    is the right thing to do but the Point does need support.

    I work with several groups who hire the Point and they says its too expensive and would like to use it more but its cost prohibits them.

    The main nights Thursday Friday and saturday
    should generate profits as a business profile
    demands of any similar venue.

    The Point is good for Eastleigh and we are lucky to have some great staff running the place, Crispian and Cheryl do a great job for us and would be hard to replace, With keith and the staff at head of house you are always meet by a warm welcome.

    I opposed the extension because the income stream wasnt there to support the £2.1million
    spend and sadly due to poor management the project over ran by £800k, it has left the Point with a bad hand to play and the rate payers a bill to pick up.

    Some of the shows I have seen there from the Tempest with Eastleigh school children in the play to My Fair lady and International Minstrel
    shows have been of an excellent standard matching any other regional theatre.

    The Kipling project was in a class of its own,
    superb, we should remember its easy to knock when we dont fully agree with the knock but
    Eastleigh would be worse of with out it, thats
    why i support it.

  6. Peter Stewart
    March 4, 2011 at 10:05 am

    Time will tell whether the Council have invested wisely. We could speculate – but what’s the point if it fuels negativity and local recession?

    It is easy to knock the “Council” simply because it is dominated by “the opposition”. But if we want to see Eastleigh succeed we must be wary of talking Eastleigh down in the process of trying to effect political change. Well done Cllr Olson for remaining balanced.

    Meanwhile let’s remember the cut in Central Government Grant which will hit Eastleigh next year. Whichever party is in “power” will still have to balance a MASSIVE net cut approaching a million pounds.

    Over the last 15 years, Eastleigh has remained reasonably stable. Most of our economic damage has come from EU legislation (Pirelli, Carriage Works, Ford etc.). There is no great reason to believe we shall suffer badly in the next few years as the nation works to reduce the huge structural deficit (created I believe during Labour tenure)?!

    So hopefully despite the massive cut in Central Government Grant, Eastleigh should see relatively few lost jobs and most of these will be from natural wastage. Also hopefully services should remain largely unaffected. Would we want it any other way? Or shall we engage in LibDem bashing and schadenfreude simply to score points?

    But if people do not like the LibDems where is the Tory opposition? There is hardly any!

    The Tory machinery over the last couple of decades has withered (from the top down) due to a TOTAL betrayal of all that is true conservatism. No wonder the Tory activists have become disillusioned and stopped putting out leaflets and door knocking! No wonder the core Tory voters now abstain, and vote LibDem or UKIP!

    If you doubt me, then take a look at the Barnsley Central by-election results today where the Conservatives suffered a 9% drop in their vote, coming in 3rd place behind UKIP! I tell you, TRUE conservatives across Britain are preparing for the TURE CONSERVATIVE REVOLT!

  7. March 4, 2011 at 10:21 am

    Is it me or is Cllr. Norgate contradicting himself..??

    He claims..
    “The Point is good for Eastleigh and we are lucky to have some great staff running the place, Crispian and Cheryl do a great job for us and would be hard to replace..”

    But then goes on to say..
    “sadly due to poor management the project over ran by £800k”

    Just to be clear readers, Crispain Cook and Cheryl Butler run The Pointless..!!

    But hey, as he says..
    “It has left the Point with a bad hand to play and the rate payers a bill to pick up.”

    O the poor Point.!! Thank goodness the rate payer will pick up this debt weather they support The Pointless or not..!!

    You tell that to the next person you want to vote for you Brian, I DARE YOU..!!!

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