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Local authority commercial investment

Inquiry

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, special reports and government responses

View all reports and responses
Eleventh Report: Local authority investment in commercial property
Inquiry Local authority commercial investment
Committees Public Accounts Committee
HC 312
Report
Response to this report
Treasury minutes: Government response to the Committee of Public Accounts on the Eleventh report from Session 2019-21
HC 312
Government Response

Oral evidence transcripts

View all oral evidence transcripts
15 May 2020
Inquiry Local authority commercial investment
Committees Public Accounts Committee
Oral Evidence
11 May 2020
Inquiry Local authority commercial investment
Committees Public Accounts Committee
Oral Evidence
LAI0043 - Local authority commercial investment
Witnesses Mr. Tural Huseynov
Committees Public Accounts Committee
Written Evidence
LAI0044 - Local authority commercial investment
Witnesses Cllr Richard Watts
Committees Public Accounts Committee
Written Evidence
LAI0004 - Local authority commercial investment
Witnesses Mr James Child (Head of Research at EG)
Committees Public Accounts Committee
Written Evidence

Contact us

  • Email: pubaccom@parliament.uk
  • Phone: 020 7219 5776 (General enquiries). For all media enquiries please contact Jessica Bridges Palmer bridgespalmerj@parliament.uk / 07917488489
  • Address: Public Accounts Committee, House of Commons, London, SW1A 0AA