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.
“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