Gravesham council will be using public money to buy hotels, shops and businesses in an effort to claw back funds being cut from central government.

In an historic meeting last night (Tuesday) the council's budget was passed unanimously – the first time ever. Opposition councillors voted with the majority group and offered a new era of bipartisan work to balance the books in the face of government cuts.

An opposition amendment to the budget was also approved unanimously on the night, earmarking up to £150,000 to provide for any costs in fighting Highways England’s proposal for a lower Thames crossing east of Gravesend.

Over the next four years the borough is to lose £2 million in government Revenue Support Grants and one way Gravesham will make up the deficit is to increase council tax by 2.7% for the next three years.

Previously, the government ruled councils could not increase their tax above 2% but this changed to an increase of 2%, or a limit of £5. Gravesham’s 2.7% equates to 9.5p each week – or £4.95 each year per household (based on a band D property) – with a bill of £186.66.

Step Two:

Raising revenue is a four-fold plan and the second way of drumming up more money is with investment.

The council holds about £30-£40m in treasury, from county council tax and housing benefit. With interest rates low, about half of that is now to be put into something called a Property Acquisitions Strategy.

The money is invested in different areas, depending on how quickly it needs to be paid back, and the money being held on a long-term basis (about £10m) is to be used to buy up business properties for rentals with long-term tenants.

The other £10m will be invested in the property market via a government-accredited property fund which will make further investments across the country.

It is estimated the council will make about £1.2m from these within four years.

Council leader John Cubitt (Con) said: “Councils all over the country have to face up to this funding cut. You need to take action, without cutting key services.

“The risk with this is very moderate. We’ve done the analysis and one of the safest places to put your money is in property.

“Even if the market should slow, rents are still going up.”

David Hughes, chief executive of the council, added: “We’re taking professional advice on this.

“We will seek to spread the risk by not having all our investments in one place.

“If the market does take a downturn, it’s unlikely to affect everything.”

In 2010 the council got more than £7m government funding from the Revenue
Support Grant. By 2019 the council will no longer receive any – it will have to be virtually self-sufficient and in fact pay almost £250,000 to the government.

Borough neighbour Sevenoaks is running a similar system and recently bought a petrol station which has made a good investment.

Cllr Cubitt said there were other options to raise the money, but none appealed. He said: “We don’t think it’s a bad deal really.

“We don’t have to provide things like Chinese New Year celebrations or a Christmas festival, or even leisure centres, but what a sad place it would be if we didn’t.”

Step Three:

Another way to increase the money in the coffers is through the council itself becoming more efficient.

It is taking steps to increase digital services, cut back on printing, and share services with other councils.

Currently the audit and fraud team is shared with Medway, and there are talks to expand this into CCTV and building control.

Mr Hughes said: “There is a risk of redundancies with partnerships, but we haven’t had any compulsory redundancies, instead we’ve worked to train people in different areas.”

It is a case of good housekeeping and council leader John Cubitt conceded: “Members of the cabinet have asked us why we haven’t done all this before.

“We don’t want redundancies. We’d rather find ways to cut back on the external services we buy in.”

The council already runs its own waste management scheme, street cleaning and ground maintenance.

Step Four:

The council is looking at ways to increase the number of homes being built in the borough.

For every home built, the government provides a New Homes Bonus of £1,400 every year for six years. That drops to four years in 2017.

Cllr John Cubitt said: “Our house building hasn’t been high, but we can put pressure on developers to get on with the work to make the most of that funding while it lasts.”

There are 500 homes planned for Springhead, 400 in Coldharbour and 300 around the town centre.