Is this the way forward for cash-strapped councils?
A Norfolk council last night revealed it had bought two town centre shops and a 160-space car park in a �3.5m deal – and promised it would generate �250,000 a year to protect frontline services.
Breckland has acquired a 30,000 sq ft building on Minstergate in Thetford which houses the Poundstretcher and Wilkinsons stores and also the neighbouring parking area from international property company Valad.
The council – which previously bought the Barnham Broom Hotel and golf complex in an �8m deal –stressed the purchase of the two-and- a-half-acre site was purely an investment and it would have nothing to do with the running of the shops.
The Barnham Broom acquisition created controversy and the latest deal is also likely to raise many eyebrows.
But Breckland leader William Nunn said both the purchases made sound business sense – and the return of 8.5-10pc per year from the Thetford stores would be far more beneficial to the district than the 0.5pc it would make in the bank.
And he said it was the 'way forward' for cash-strapped councils.
Mr Nunn said that councils like Breckland were not allowed by government to spend their capital reserves on day-to-day spending – but could invest them and use the proceeds to keep down council tax bills and support frontline services.
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Mr Nunn said Breckland's grant from the government was being cut from �11m to �8.9m.
'So the �250,000 will mean we can continue to provide services which would have had to be taken out of the budget. We want to maintain all our frontline services,' he added.
Mr Nunn said it would help save services such as arts, community development and business support.
Mr Nunn said the council was also looking to reduce costs further by sharing its management team with South Holland District Council in Lincolnshire.
Both the Thetford shops have signed 10-year leases and the rent they pay to Breckland will be about �250,000 a year.
The council receives about �500,000 a year from Barnham Broom and the total Breckland makes from its commercial property portfolio is about �2.3m – which is about the same as it gets in from council taxpayers.
Mark Kiddle-Morris, Breckland executive member for economic and commercial, said the council was looking to increase the amount of property it owns to generate more money. He said the current portfolio was 96pc let.
Breckland's head of asset management Steve Udberg said: 'The Thetford acquisition is an excellent opportunity in terms of a property investment and provide a very good return. It shows Breckland is entrepreneurial and prudent and investing money to create the investment in the face of financial pressures and cuts.'