I would like to respond to a previous letter in these pages (pasted below) which criticised East Hampshire District Council’s borrowing, particularly for investment in property.
East Hampshire District Council’s property portfolio is estimated to be worth just under £115 million and is where we would expect it to be at this time.
Although the value of any property portfolio will inevitably rise and fall with the market, the true measure of its success is in the income it generates.
Our portfolio currently yields around £8.5 million a year, which is more than enough to cover the interest on the loans, maintain the properties and still provides more than £3 million for vital, front-line services.
Even with a two-year pandemic and the high inflation of recent times, we are still collecting around 98 per cent of rent due and running with very low vacancies.
On top of this, it is important to remember the council’s borrowing has not been solely put towards property investment, but also includes other public spending, such as our new leisure centres.
This information is freely available on our website and I thank the previous correspondent for giving me the opportunity to repeat it again here.
Cllr Tony Costigan
East Hampshire District Council’s portfolio holder for property
Be honest now... (letter published May 11, 2023)
Now the local elections are over, councils will be reforming with their newly-elected councillors.
Here is a golden opportunity for them to come clean with electors on the major financial issues that confront them – and us.
At town level I refer to the plans for refurbishing Petersfield Festival Hall. These plans have already absorbed hundreds of thousand of pounds with only some drawings to show for this huge expense.
At district level, East Hampshire District Council has borrowed millions of pounds from central government to purchase commercial property which has almost certainly declined in value since. In addition, it is likely the cost of borrowing has gone up.
The newly-formed councils will only briefly be in the happy position of being able to blame the previously-elected councils for what will undoubtedly be bad news.
Cynicism aside, I sincerely hope the new councils will take this opportunity to be honest with their electors for once. They should issue without delay some straightforward financial figures that enable their electors to understand exactly what is happening on these issues.
Local electors deserve nothing less from the people they elected.
If councils do not act honestly now, then clearly the recent elections were nothing more than an (expensive) sham.
Bell Hill Ridge, Petersfield
Be open with us (letter published May 18, 2023)
I would like to support the proposal made by a correspondent in this newspaper last week that the new East Hampshire District Council debate the state of the council’s huge borrowing for property speculation immediately and in public.
If not, the new councillors may carry the blame for massive rate rises (as has happened elsewhere) in future caused by the financial gambling of the previous administration.
EHDC have never published any data I could understand or debated the real situation in public.
However, the new councillors should know that valuations and debts are published by central government.
As at March 2020, EHDC’s valuation of its property investments was £159million against loans of £126m.
As at March this year, the investments are valued at £109m against outstanding loans of £120m.
I must emphasise the valuations are entirely the estimate of the previous EHDC administration. Central government is very clear these valuations have absolutely nothing to do with them.
On a specific point I would point out it was always stated that profit from the property investments would be used to subsidise the rates. However, the property account is now a financial liability.
So did the last administration transfer money from this property account, which is in deficit, to the council coffers to keep the rates down in an election year?
This is a debate I believe many ratepayers would like to hear.
The EHDC data is published by central government at https://www.dmo.gov.uk/responsibilities/local-authority-lending/current-data/ I cannot find where, or if, EHDC publish it.
I also suggest our new councillors abandon the process of non-public cabinet decisions being endorsed by non-public full council meetings. Instead just require the chief executive, who is apolitical, employed by and answerable directly to councillors, to come to a meeting with a report on investments and answer questions, in public, to our elected representatives. (It is called open government).
To ease any immediate concerns, all but one of the government’s loans to EHDC are interest-only so there is no immediate possibility of a default.
The first capital repayments of some £25m are not due until 2028-29.
I can here the cry already: “It was fine when we left it.”
I urge our new councillors to get it all out in the open now.
Finally, we can forget about the council going public affecting the value of investments. Financial institutions know all about EHDC and all the other councils who have rashly speculated in property and are now in a precarious position. It is only the public who are in the dark.