MOST people see their local council as a bland, bureaucratic organisation that collects council tax and uses the money to fill potholes, empty bins and look after elderly people.

While most councils across the country do all that and much more, your council tax doesn't cover the cost of providing those services.

Money collected from business rates and council-run car parks and leisure centres helps, but most councils were still left with a deficit each year, even before anyone had heard of Covid-19.

That's because they were heavily reliant on government funding, which has been slashed since 2010.

The Local Government Association says councils have lost almost £15 billion of central government funding over the last decade and that has forced council bosses to make difficult decisions, because they are legally required to balance the books each year and meet growing demand for expensive services.

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Libraries and swimming pools are shut down, council buildings are sold off, budgets are cut, loyal employees are made redundant and council tax is increased year after year after year, but it's still not enough.

That's why councils in Berkshire and other parts of the country are starting to take risks.

They are using low-interest government loans to buy shops, warehouses, offices and other commercial property, so they can rent the buildings out and use the money to fund key council services.

The Conservative-run Wokingham Borough Council, which no longer recieves a revenue support grant from the government, has bought over £90 million of property.

The council says it will continue to be “a very commercially minded organisation” because its investments in commercial property and social housing generate around £7.2 million of income each year.

The people in charge of neighbouring West Berkshire Council have spent £63 million on property, buying everything from a bank in Eastbourne to a Sainsbury’s store in North Yorkshire, and they expect a net return of around £1.26 million (2 per cent) a year.

Neither council seems particularly concerned about the pandemic causing property prices to fall, because they plan to continue collecting rent from tenants who have signed long-term leases and they are not looking to sell the buildings anytime soon.

Wokingham Borough Council also claims it has spent most of the money on supermarket stores and warehouses in Wokingham, which have performed well throughout the pandemic.

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However, the pandemic has highlighted the fact that the financial rewards of these investments come with considerable risk and if these councils get it wrong, taxpayers will be left to pay off the massive loans and the interest.

Reading Borough Council recently decided it's not worth the risk and scrapped plans to invest £180 million in property over the next three-years.

The Labour-run council, which has already invested almost £75 million in four properties, said the decision was made "in light of the current economic and financial uncertainty arising from the Covid-19 pandemic".

The council bosses obviously do not want to follow in the footsteps of Croydon Council, which effectively declared bankruptcy in November after failing to close a £66 million funding gap.

The London council borrowed £545 million over three years to invest in commercial property and housing, but auditors said the council's "strategy to invest its way out of financial challenge" was "inherently flawed".

They also found the Labour-run council had spent almost £30 million on Croydon Park Hotel, which went into administration earlier this year, and lent almost £200 million to its housing company Brick by Brick, which has failed to turn a profit.

You don't have to look to hard to find other examples of disastrous investments, which will ultimately cost the taxpayer.

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The government has become increasingly concerned about these risky investments and is looking to stop councils from using low-interest loans from the Public Works Loans Board to buy property.

A report published by the Treasury states: "At the local level, it exposes ratepayers to the risk that the income does not materialise, leaving the local authority with an inflexible commitment to keep up with the repayments on their loans.

"Within the wider public sector, it diverts money from core services such as schools, hospitals, and roads. And, because local authorities can often access debt more cheaply than the private sector, it becomes hard for businesses to compete."

According to The Local Government Association, the government is now looking to severely restrict council borrowing for property investment through the introduction of the Local Authorities (Borrowing and Investment) Bill 2019-21.

But without the opportunity to make investments or additional government funding, the cycle of crippling cuts to key council services is set to continue.