An independent, expert panel should be created to oversee a debt-ridden council’s portfolio, a report has recommended.
The report from the Chartered Institute of Public Finance and Accountancy (CIPFA) was commissioned by the government because of Warrington Council’s £1.8bn debt.
It said the council’s debt-funded investments portfolio was “very large and uniquely complex” and recommended the council should undertake a review of its commercial portfolio.
Warrington Council said it welcomed the publication of the report.
“We have supported the report being made public since receiving the draft report in September 2023,” it said in a statement.
The council’s assets include loans to companies and registered social landlords, shareholdings and company interests, property and regeneration assets.
It also provides loans to housing associations and another loan to The Hut Group and the report said the council will “need to manage this loan well”.
The council also has a property investment portfolio which includes Birchwood Park and other sites such as supermarkets, offices and industrial buildings.
The report said the council had “significantly grown and diversified” its investments since 2016/17.
It said that “justified by the then-constituency with the commercial and entrepreneurial thrust of government policy, these investments have generated income, which has contributed to council revenue budgets”.
But it said the economic environment has changed since 2016.
The report’s authors said the investment portfolio suggested “a number of potential risks” and that because of the size, mix and complexity of the portfolio, managing it would be a “exacting challenge to any local authority finance team and leadership”.
Eight recommendations
The report makes eight recommendations.
These include the formation of an independent investments advisory panel, reviewing the skills of those involved in audit and creating a dashboard to view and manage all its commercial interests.
It also recommends that the council should assess whether it should be making decisions over “impairments” in its portfolio, highlighting the fall in value of its share in Redwood Bank.
The government has ordered a best value review into the council and appointed an inspector.
The inspector’s findings are due by August.
