Eleventh Report: Local authority investment in commercial property
- HC No.
- HC 312
- Published
- 13 Jul 2020
- Items
- 0
- Response
- Response document linked Read government response ↗
Select Committee · Public Accounts Committee
Local authority commercial investment
Status: Closed
Opened: 17 Apr 2020
Closed: 14 Sep 2020
1 report
Inquiry scope
Local authorities have invested in commercial property for a long time, but there has been a recent step-change in the scale of activity. Estimated commercial property purchases for 2013-14 to 2015-16 were £460m; compared to an estimated £6.6bn for 2016-17 to 2018-19.The NAO’s report ‘Local authority commercial investment’ assesses whether MHCLG has effective oversight of the risks to the financial sustainability of local authorities due to their investments in commercial property. The report finds that there has been a significant increase in out-of-area commercial property acquisition. There has also been an increase in acquisitions that are outside the acquiring authority’s LEP area. The report also finds that changes made by CIPFA and MHCLG to statutory guidance have not stopped some authorities borrowing large sums, to invest in commercial property. Commercial property acquisition is concentrated in a relatively small proportion of authorities. The NAO conclude that local auditors have raised concerns about the governance and risk management arrangements for investment activity in some authorities. The data MHCLG collects has limited usefulness for monitoring commercial activity and assessing its risks. The Committee will question officials from the Ministry of Housing, Communities, and Local Government on gaps in commercial skills in local government, and the extent to which the Department formally monitors commercial activity and long-term exposure to risk. The Committee will also ask officials about the Ministry’s response to COVID-19, and what impact the pandemic has had on local government finances. The NAO’s February 2020 report on ‘Local authority commercial investment’ assesses whether MHCLG has effective oversight of the risks to the financial sustainability of local authorities due to their investments in commercial property.Reports
Oral evidence sessions
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| Date | Session and witnesses | Source |
|---|---|---|
| 15 May 2020 |
Local Authority Commercial Investment
Alex Skinner · Department for Levelling Up, Housing and Communities,
Catherine Frances · Department for Levelling Up, Housing and Communities,
Jeremy Pocklington · Ministry of Housing, Communities and Local Government,
Will Garton · Department for Levelling Up, Housing and Communities
|
View ↗ |
| 11 May 2020 |
Local Authority Commercial Investment
Judy Pearce · South Hams District Council,
Paul Brooks · Rushmoor Borough Council,
Richard Watts · Local Government Association Resources Board,
Rob Whiteman · CIPFA
|
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Who gave evidence
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| Witness | Organisation | Sessions |
|---|---|---|
| Alex Skinner · Director of Local Government Finance | Department for Levelling Up, Housing and Communities | 1 |
| Catherine Frances · Director General, Local Government, Strategy and Analysis | Department for Levelling Up, Housing and Communities | 1 |
| Jeremy Pocklington · Permanent Secretary | Ministry of Housing, Communities and Local Government | 1 |
| Judy Pearce · Leader | South Hams District Council | 1 |
| Paul Brooks · Executive Head of Regeneration and Property | Rushmoor Borough Council | 1 |
| Richard Watts · Chair | Local Government Association Resources Board | 1 |
| Rob Whiteman · Chief Executive | CIPFA | 1 |
| Will Garton · Director General for Levelling Up | Department for Levelling Up, Housing and Communities | 1 |
Correspondence
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| Published | Direction | Letter |
|---|---|---|
| 10 Jun 2020 | — | Correspondence from Durham County Council following on from the Committee's evidence session on 11 May on Local Authority Commercial Investment |