SURREY County Council has come under fire for “playing the property speculator” to the tune of £74 million, while proposing to make a £2.8 million cut to its housing related support service.

If the cut is approved following SCC’s public consultation, which ends on August 13, it would represent 70 per cent of the budget for the service to help vulnerable residents live independently, which includes Waverley’s eight warden-led sheltered housing schemes.

SCC is one of many local authorities that have established themselves as major investors in commercial real estate in the past two years, taking advantage of access to cheap loans from the Public Works Loan Board.

Cash-strapped councils maintain that the income generated from their property investments will plug the holes in their budgets and pay for key services, but experts have warned some are building “exceptionally risky” portfolios.

Waverley Borough Council (WBC) is one of the smaller local authorities to follow Surrey’s lead, and kicked off its new investment strategy in March by borrowing to buy a £2.4 million business unit in Farnham.

SCC has snapped up Malvern Shopping Park in Worcestershire for £74 million, having already acquired a residential property in Worcester for £11.8 million, EE’s regional headquarters in Bristol for £20 million and, closer to home, the former Friends Life office building in Dorking for around £36 million.

A freedom of information request to every local authority in Britain by The Times has just revealed Surrey is one of 11 councils to spend more than £50 million on property investments, as they try to replace revenue lost through government cuts.

Local authorities now account for up to a third of buyers in some areas, inflating prices. If rents collapse, councils face the prospect of debts that they can afford to repay only by cutting services or raising taxes.

The Royal Institute of Chartered Surveyors has warned that demand for retail space is falling and rents stagnating as consumers curb spending or shop online.

Meg Hillier, the Labour MP who chaired the public accounts committee in the last parliament, said: “The danger is a repeat of the Icelandic banking collapse, when councils were overexposed to one market. A crash in the value of offices or shopping centres could have a very big impact, with councils suddenly owning a lot of white elephants.”

John O’Connell, chief executive of the TaxPayers’ Alliance, told The Herald: “SCC cannot on the one hand threaten residents with a 15 per cent rise in their council tax, because of a lack of funds, and then find cash down the back of the sofa to go and play the property speculator.

“Too often we see councils going far beyond their briefs and taking away business that can adequately be done by the private sector. Local residents really need their local representatives to be offering better value for money and should think again before committing any taxpayers’ money to this project.”

Responding, a SCC spokesman said: “With need for crucial services in Surrey continuing to rise we have devised an investment strategy that will help us secure the county’s future by ensuring we have money for key services, such as adult social care, children’s services and road maintenance, in years to come. However, we do not comment on individual cases or transactions that we may or may not be involved in.”

SCC’s bid to save £2.8 million through cuts to its housing-related support, currently out to consultation, states: “SCC will no longer provide funding for housing related support. This may mean your housing-related support will cease. If you have an on-going need for support you will be able to ask adult social care for an assessment of your needs. If, as a result of this assessment, you qualify for support under the Care Act eligibility criteria, you will receive funding through a personal budget from SCC.”

If approved, SCC’s shift from the current universal offer to targeted support for adults with eligible needs, will cut funding to WBC for community warden services in sheltered housing schemes.

Sue Zirps, chief executive Age UK Surrey, said: “As we are all aware SCC needs to make additional savings this year and this is one area they have identified as a possible saving.

“The consultation has gone out to everyone who may be affected and SCC’s Cabinet will make a decision once this has ended. It would be hoped that WBC could find a way of continuing this vital service to their residents if funding were to be reduced but it is too early to comment further at this point as the consultation is still underway.”

SCC opposition Farnham Residents member Andy MacLeod voiced concern about the proposals at a Farnham Town Council meeting. “I’ve learnt in my short time as a councillor at Surrey that Surrey are very short of money for everything, and we’re beginning to see the consequence of that.

“Surrey are proposing to cut out completely the housing-related support they give to the supported living homes in Surrey, eight of which are in Waverley, three in Farnham.

“That’s £178,000 and it actually pays for half the costs of the managers of these homes, so if that money’s slipping away the people there are going to find that instead of having a manager for each home, as they are used to, managers will have to look after two homes.

“I don’t see how that’s going to work, and I’m going to be looking for support from Waverley’s other Surrey councillors to see if this is bit too draconian.”

Responding a WBC spokesman said: “Historically, SCC has provided some funding to districts and boroughs to provide housing-related support.

“In Waverley, this funding goes towards the costs of the borough’s sheltered housing service.

“WBC arranged consultation meetings at each of the sheltered housing schemes to help SCC officers present their proposals to Waverley housing tenants.”

• For more information about the consultation, visit www.surreysays.co.uk or e-mail [email protected].