BOURNEMOUTH council is preparing to invest up to £125million in the commercial property market in an effort to bring in revenue and reduce cuts to services.

In a move it describes as “high risk”, the authority intends to appoint an investment panel to put money into offices, industrial, shopping, hotels, care homes and car parks.

The announcement comes amid concern that some councils have been placing multi-million pound “bets” on commercial property.

Labour MP Meg Hillier, who chaired the public accounts committee in the last parliament, told a national newspaper yesterday: “The danger is a repeat of the Icelandic banking collapse, when councils were overexposed to one market.”

But Bournemouth said it is spreading its investments, with no more than 25 per cent in one sector.

Bournemouth council’s cabinet will be asked to approve the idea of borrowing money at low rates from the government’s Public Works Loan Board and then investing it in property.

Cllr Philip Broadhead, cabinet member for economic growth, said: “Many local authorities have already built up large investment property portfolios to generate additional income to help underpin their financial position.

“We have the opportunity to create a portfolio of income-generating property assets and replenish our freehold stock for the next generation, which could make a significant contribution to securing the council’s financial position whilst protecting frontline services.”

The council says its plan could also be a way of safeguarding key employment or economically valuable sites in the conurbation.

It points to the example of Eastleigh council, which has a £200m portfolio of assets generating an income of around £5.5m.

Bournemouth says a £100m investment in commercial property will typically yield £1.5m of income a year, which could provide more than 10 per cent of the savings it needs to make by 2019-20.

It says every £200,000 of income funds eight street cleaning staff or repairs 6,667 potholes.

The investment panel would include council leader Cllr John Beesley, deputy leader Cllr Nicola Greene and Cllr Broadhead and senior officers.

A report says the strategy is categorised as “high risk”, adding: “This is principally due to the large sums of money involved with implementing the strategy and the risk of adverse media coverage.”

An investigation published by The Times yesterday found councils across Britain had paid £2.7billion for commercial properties since 2015.

Lord Okeshoff of Seagrove Bay, co-founder of Olim Property, told the paper: “Councils might as well be buying shares with public money or betting on the 2.30 at Ascot. It’s totally inappropriate and building up risks for the future.”

However, Cllr Broadhead said: “Unlike some councils around the country which are taking an aggressive approach to their investment portfolios, quite often putting all their eggs in one basket, we are proposing a more measured strategy, spreading our investments across a range of sectors, with no more than 25 per cent in one sector.

“Furthermore, we have a team of internal and external experts who will subject each investment acquisition to a detailed business case, including proposed mitigation measures if necessary.”

In 2014, the council launched a fund dubbed the “Bank of Bournemouth” to lend to businesses. Forecast to yield between £6.9m and £24.2m in 10 years, it was suspended 18 months later after lending to just 22 businesses.