Question to the Ministry of Housing, Communities and Local Government:

To ask Her Majesty's Government whether they monitor (1) investments made in commercial real estate by local authorities financed by the Public Loans Board, (2) the location of such real estate, and (3) the consequences of local authorities assuming the associated risk.

The decision making process for capital investment and borrowing decisions is a local authority decision. The Ministry for Housing, Communities and Local Government is responsible for the overall framework for local authority capital activity which local authorities operate within. This would include investments in commercial real estate.

Government does not routinely monitor specific investments that local authorities make in commercial real estate, this includes those that are financed by loans from the Public Works Loan Board. Therefore, we do not collect any information on the location of any real estate investments made by local authorities.

The Statutory Guidance on Investments was recently updated by the Ministry for Housing, Communities and Local Government and took effect from 1st April 2018. It was updated to ensure that the framework that local authorities operate within reflects the activities of the sector. One of the key aims of the recent changes to the Statutory Guidance was to enhance requirements of transparency and risk management for all investments including those in real estate.

In addition local authorities must ensure that all of their activities are managed well financially. This includes the legal requirement to have regard for best value. This means that a council must make arrangements to continuously improve the way its functions are exercised and have regard to economy, efficiency and effectiveness.