Is council value for money?

Eastleigh civic offices

Information released by the Audit Commission suggests that Eastleigh Borough Council offers poor value for money for taxpayers when compared to other councils.

Spending per head on many key services is at best average or below average. Total net spend per was £358 per head last year compared to an average £1,104 per head for all councils in England

However EBC is in the top 5% of highest spending councils when it comes to acquiring land and property and are on the way to amassing a £90 million portfolio financed largely on credit.

However the data also shows Eastleigh outperforms the majority of councils when it comes to spending on transport and also has administration costs that are well below the average, significantly less money is spent on collecting council tax for example.

A ‘value of money’ tool on the Audit Commission’s website enables visitors to compare their local council spending data to other councils nationally or locally or statistical similarity.

‘Value for Money’ tool

Browsing the data it’s easy to see how the council have maintained its ten year record of below inflation Council Tax increase through below average spending on services and income from the property portfolio. In February Council leader Keith House said of the council’s record of Council Tax:

“This has been achieved in large part, due to our record of sound financial management, and our programme of investments in property”

The council has been aggressively increasing its commercial property portfolio which at December 2011 was valued at almost £53 million – and has been added to since.

The portfolio includes hotels, pubs, shops and office blocks.

Click here for portfolio details

The council is also still trying to proceed with the purchase of the Aegeas Bowl (formerly Rose Bowl)cricket ground and finance the building of a luxury hotel on the site  at a total cost of £36 million.

While the council is happy to finance the building of a multi -million pound hotel for a private company Audit Commission figures show that spending on grants to renew and maintain the private housing stock is in the lowest 10% of councils while income from council loans to householders for repairs have rocketed.

In the2009/2010 audit letter the audit commission described the council’s plan of borrowing in order to expand its property portfolio as ‘ambitious’ and warned:

“The level of borrowing is rising significantly and the Council will need to continue to keep under review the financing and affordability of its capital programme”

In the latest audit letter published in January the audit commission further warned  that the council should :

“take a prudent view on the future movement of interest rates; and recognise the risks to future rental and lease income at a time of increasing economic uncertainty.”

Why not take a browse n the Audit Commission – if you find anything interesting- why not share it on here?

See also: Olson warns on council borrowing

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  5 comments for “Is council value for money?

  1. May 23, 2012 at 9:09 pm

    I was expecting the property portfolio to be bigger than that…

    • pianoman
      May 24, 2012 at 10:18 am

      I think they own more, after all there’s the Civic Offices, The Point and Wessex House for a start, this is just the recent spending spree! – and doesn’t yet include the Rose Bowl ground and God knows what else…..!

  2. mm
    Eastleigh Xpress
    May 24, 2012 at 12:21 pm

    What!! Do you guys think their exposure is not big enough? Did you click on the link? (there are three sheets you know, you have to scroll down)
    If you think £53 isn’t a lot you could be in for a shock as that is what the council reckons their portfolio was worth in December.
    The total ‘take on’ value – most which dates back to 2007 is around £46k.
    Since 2007 according to the Nationwide BS residential property values have fallen 33% while Investment Property Databank say Commercial property values have fallen 31% over the same period.
    But according to the council, thier portfolio value has increased by 29%!!
    Astonishing!
    Take a look at one property – Collins House.
    Acquisition value in 2007 £865K – now apparently worth £1.1 million.
    If it fell vacant how long would it remain empty? a week? Several weeks? Six months?
    What about the B&Q site how long would that be void?
    Of course commercial rents are also falling in line with drops in value.
    These buildings cost money to maintain as well, with major works at Wessex House,Fleming Park and the Point recently and much to be done at the Dilapidated Eastleigh House before the Council can move in.
    According to bloomberg the UK commercial property market is in the biggest slump since records began and values have fallen for five. consecutive months.
    I am not surprised the council appear to be having difficulty in getting the Rose Bowl deal sewn up.

    In view of the ongoing slump I’d be interested to know just what the current market value is against borrowing and if the council is in ‘Negative equity’ yet.
    If you haven’t clicked on the link above to Cllr Olson’s warning on EBC’s property portfolio you may find it interesting.

    • pianoman
      May 24, 2012 at 12:34 pm

      Thanks for the advice to scroll down!! I see what you mean………crikey!!

      • May 24, 2012 at 8:14 pm

        Seconded…!

        I’d omitted to scroll down too.
        Crikey with knobs on…!

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