THE way in which council services are funded is being drastically overhauled as the result of the decline in central government grants, leading to local authorities having to come up with their own radical alternatives.
While the cash support might dwindle, the problems facing local authorities won’t, and an increasing number are setting up their own financial vehicles to invest in commercial and residential property with the aim of turning a profit to help sustain services.
In Eden, that has led to the creation of Heart of Cumbria, which also has the particular aim of investing in affordable housing — one of the council’s key priorities — and managing it on behalf of the council.
This is a private company wholly owned by the council on taxpayers’ behalf and in its fledgling days it is able to call on public money in order to operate. It has, for instance, access to a £1 million loan and is also likely to require what has been described as a “few million” from council coffers in order to purchase affordable homes from a private developer which housing associations do not seem to want. This is a luxury which other private companies do not have.
Heart of Cumbria might prove to be the resounding financial success its well intentioned directors think it will, and it is right that there is an arm of the council that is seeking investment in the district and taking steps to help ease the affordable housing crisis. But it is also right that, because it is depending on so much help from the taxpayer in its early stages of development, investment decisions taken by the company’s board are subject to public scrutiny.
Will full accounts be published on an annual basis, for instance, and, at a time when Eden Council is seeking to transfer services to town and parish councils, will the company be able to justify taking on more staff?
At the moment, the company depends not on the Bank of Mum and Dad, but the Bank of You and Me, and, as its backers, we ought to be kept informed of how well, or badly, our investments are doing.