No worries: "Lessons will be learned" will be the usual trope, as councillors shrug their shoulders and move on to other things.Oh dear, I had no idea local councils were borrowing heavily to speculate on commercial property, looks like chickens are already coming home to roost for Croydon council. This was a disaster waiting to happen!
Why local councils are loading up on debt
Local authorities are trying to make up for funding cuts by speculating on property markets and car showrooms. But what will happen when the cycle turns? Simon Wilson reports.
by: Simon Wilson
7 MAY 2017
Over the past two years, dozens of local authorities in England have gone on an unprecedented debt-fuelled spending spree, buying up around £1.7bn worth of commercial property assets – shopping centres, office blocks and so on – using cheap loans from an obscure Treasury offshoot known as the Public Works Loan Board. The PWLB has been around since 1793 (though is shortly to be abolished and its functions formally swallowed up by its parent, the UK Debt Management Office).
Why local councils are loading up on debt
Local authorities are trying to make up for funding cuts by speculating on property markets and car showrooms. But what will happen when the cycle turns? Simon Wilson reports.moneyweek.com
October 2020:
Croydon council on verge of bankruptcy after risky investments
https://www.archive.is/oldest/https...n-verge-of-bankruptcy-after-risky-investments
- Croydon borrowed £545m during the past three years to invest in housing and commercial property. This included a £200m loan to its own housing development arm Brick By Brick, which has yet to return a dividend. The council has capital borrowings of nearly £2bn.
- It invested £30m in the local Croydon Park Hotel in 2018-19. This went into administration in June. It also spent £46m on a shopping centre. The council’s strategy of “invest[ing] its way out of financial challenge” was “inherently flawed”, as councillors did not properly understand the retail and leisure markets, auditors said.
- It allowed a £39m overspend on adult and children’s social care to spin out of control after 2017 when an Ofsted inspection branded its children’s services “inadequate”, and subsequently used accounting tricks to mask its failure to control costs in these departments.
November 2020:
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I agree it seems so expensive to retrain as an adult, some people feel that they end up trapping themselves in one career. With less high street jobs this then puts pressure on the number of people applying for other sectors such as office work, and so everything is a massive competition. We need to open up industry again, with more ethical practices, more manufactoring here rather than abroad, more jobs in social services etc, so that services get more people power and more people can use their talents to help people. It sucks that we are so trapped by money, in life.
I think the price of housing is crippling the country. The price of monthly rent is eyewatering but people do not have enough hours in the day to make enough excess disposable income after rent and bill deductions. No wonder mental health is poor
It's like rolling a rock up a hill just to stay afloat, financially 
I think the price of housing is crippling the country. The price of monthly rent is eyewatering but people do not have enough hours in the day to make enough excess disposable income after rent and bill deductions. No wonder mental health is poor
It's like rolling a rock up a hill just to stay afloat, financially 
Yep! For years it's been celebrated as good news homes get more expensive. Ever more tax payers money is paid out in housing benefit and so many people could never afford their own home if they had to buy it now. The average person thinks borrowing money to get speculate with buy to let is a guaranteed way to be a millionaire in a few years.
Housing is destroying the country.
Kirsty and Phil have a lot to answer for! Although "expert" Phil's property
I agree it seems so expensive to retrain as an adult, some people feel that they end up trapping themselves in one career. With less high street jobs this then puts pressure on the number of people applying for other sectors such as office work, and so everything is a massive competition. We need to open up industry again, with more ethical practices, more manufactoring here rather than abroad, more jobs in social services etc, so that services get more people power and more people can use their talents to help people. It sucks that we are so trapped by money, in life.
I think the price of housing is crippling the country. The price of monthly rent is eyewatering but people do not have enough hours in the day to make enough excess disposable income after rent and bill deductions. No wonder mental health is poor
I don't know how many times I read jobs are not for life anymore you have to be prepared to adapt and retrain what with buttons?
So many mothers are pushed out of employment market once having kids mox discrimination and fact full time nursery fees us the same as my mortgage
Now casual work in retail and hospitality is gone be even harder parents find jobs that fit in around the kids.
I honestly don't know what to do.
I would love my own business but not sure what and no capital.
I have freinds technically employed by their self employed husbands so they get to claim business loans and free 30hours childcare.
My youngest won't get funding until term after 3rd birthday 15hours only gets 1 year because how birthday falls as starts reception year after.
I guess I aim go back to college in September and try do some sort of course.
Its so hard living on single income because 2020 been so expensive we were fortunate we had inheritance for deposit or we be paying more in rent than current mortgage.
Have 2 more go senior's with uniform costs hundreds plus extra bus fare.
Do you know how everyone affords it when they have kids.
House prices are major problem for sure and low wages.
Tesco started it by giving back the money saved by the buisness rate cut caused by covid. Morrisons then Sainsbury's followed.
Lidl and Aldi have said nothing as have ASDA, so far
Lidl and Aldi have said nothing as have ASDA, so far
Given the massive profits the likes of Tescos, Sainsburys, Morrisons et al, have been making since the pandemic kicked in last March, so they should pay back their tax-payer subsidised business-rates relief. If all the big players did the same it could net the Treasury with a £1.5bn saving, which admittedly won't make a huge dent repaying the £280bn it has paid out keeping the economy afloat, but every little helps.
Apparently, business rates are the commercial property version of the council tax, but are calculated on a very complicated and controversial set of algorithms which tend to favour online businesses over traditional High Street ones. Seems that the likes of Amazon pay far less in BR because most of their commercial properties are warehouses usually located well away from prime city and town hubs. While High Street businesses pay more because most of their sites are prime retail locations.
It is also interesting that Britain's business rates are the highest in the developed world according to the Organisation for Economic Co-operation and Development, at something like 4.2% of GDP
The next review of business rates will be next year, and there's pressure on Sunak to offer a more level playing field for all businesses, especially High Street ones given the demise of so many familiar names over the last few months.
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Bumppp How bad do we think this recession’s going to be? Really feeling the pinch of my double electricity bill
How bad do we think this recession’s going to be? Really feeling the pinch of my double electricity bill