The coronavirus lockdown measures have been quite detrimental to the economy of the UK, affecting investments such as airports and property.
Thousands of employees across the country are at risk of being made redundant as the English local councils are set to shed several jobs and cut services. Due to the pandemic, a lot of income was lost from significant holdings in office blocks, retail parks, airports and cinemas.
Manchester city council and Luton council lost about £100 million in airport dividends alone. More than thirty local authorities receive at least one-quarter of their income, which they spend on services, from commercial investments.
A number of authorities have taken “extreme” levels of debt to finance their commercial property spree, risking cuts to services and a big bill for local taxpayers. The government has criticised the members of public accounts committee (PAC) for their failure to rein several councils that have each borrowed more than £1 billion to build up their property portfolio.
The chair of the PAC, Meg Hillier said: “The [Ministry of Housing, Communities and Local Government (MHCLG)] did not even bother to keep track of the underlying numbers or likely risk but at the end of the day, the central government will have to step in if a council fails.”
MPs stated that the government of the UK had been “blind to the level of exposure of the local government sector” to commercial investments.
Among the most exposed, are Conservative-led councils in south-east England, which account for over half of the commercial property procured between 2016 and 2019.
The chair of the Local Government Association`s resources board, Richard Watts, said: “Councils have faced a choice of either accepting funding reductions and cutting services or making investments to try and protect them. As the committee rightly highlights, this was an approach that was encouraged by the government.”