South Ribble Borough Council has scrapped a multi-million pound plan to buy an industrial unit in Southampton.
The authority was revealed to be considering the £3.5m purchase last month, but a meeting of the full council heard that the deal would not have been compatible with the borough’s own policy on property investment.
The news was greeted with applause by members of the public watching in the council chamber.
“An opportunity was presented to us some time ago for an investment in Southampton,” Colin Clark, the council’s cabinet member for assets, explained.
“It [was suggested] by some consultants whom we employ [for that purpose] and, in the first instance, it appeared to comply with our investment property strategy. But on reflection, and with further investigation, it did not - and we have not proceeded with it.”
He told the meeting that officers are to conduct a review of how the authority decides where to invest its money.
“We have to carry out due diligence on any opportunity that arises, because we’re looking to to get a better return so that we can reduce council tax,” Coun Clark added.
Leaked documents revealed that the Southampton deal would have seen the council spend £3.17m on the building itself, plus stamp duty and solicitors’ fees. It was estimated that rental income would have generated £173,000 every year, but the cost of managing the property would have reduced the final figure returned to the council’s coffers.
The building is based on the Chandlers Ford Industrial Estate in the south coast city, some 236 miles away from South Ribble’s headquarters in Leyland.
The statement revealing the rethink came after a resident questioned why the council had looked so far from home for an investment opportunity.
“When there are record levels of investment in South Ribble from the likes of Amazon, why [would] the council ever feel the need to invest in a commercial property in Southampton?” Haydn Williams asked.
“Will you be recommending to other councils that they invest in South Ribble - and can you explain how this looks to any potential investor that the council can’t even invest in its own area?”