WEST Berkshire Council (WBC) will borrow £100 million to invest in commercial property.

It plans to use rent from offices, shops and other buildings to help replace government funding cuts.

The council has already spent £60 million and plans to spend another £40 million soon.

Once all the £100 million has been invested, WBC hopes to raise £2 million from rent per year to pay for public services, which is around two per cent of what it raises in council tax.

There are no limits on what councils can borrow. The debt is borrowed from the Treasury, which charges around 2.5 per cent interest. Once the £100 million has been spent, WBC might borrow even more.

Anthony Chadley, the council’s lead member for finance, said: “As we get nearer £100 million, I think we can reassess our strategy and we will see. I would not rule [further borrowing] out.”

Purchases include £17.76 million on offices in Newbury Business Park, £9.2 million on a warehouse in Chippenham, £6 million two supermarkets in North Yorkshire, and £8.57 million on two town centre shops in Lincoln in the east Midlands.

Councils used to only buy properties for the direct purpose of delivering services. But since 2010, the government has cut 60p out of every £1 for local public services, according to the Local Government Association, who predict an £8 billion funding gap by 2025.

Across the country, councils are hoping rent from commercial property can help fill that gap, the Bureau of Investigative Journalism recently revealed.

Graham Jones, the leader of the council, said those government funding cuts were needed to get the country’s finances under control rather than heap more debt onto future generations. However, the debt used to invest in commercial real estate will take half a century to pay off.

Councillor Jeff Brooks said: “Rather than giving £35 million to buy some distant remote shopping centre, garage or warehouse … could that money be used to locally to help people in West Berkshire? It’s not all about the money, it’s about the social benefits as well.”

Cllr Chadley said: “We purely look at it on the returns, not on a moral compass. Investing in West Berkshire would restrict what we could invest in. Our strategy is very safe and very risk averse.”

Cllr Chadley explained buying offices in places like the Midlands is safer from a financial perspective than spending money in West Berkshire, because spreading the investment geographically mitigates risk.