The leader of a local council which has gambled hundreds of millions of pounds on the property market has been ousted by party colleagues, and may now face an independent investigation.

No, loyal reader, don’t get too excited just yet… It’s not happened in Labour-run Croydon, where Tony Newman’s council has run up debts of £1.5billion, including lending at least £260million to loss-making house-builders Brick by Brick, while also splashing the (public) cash on a town centre hotel, an out-of-town leisure centre and a Purley Way tools centre.

Newman is expected to be re-elected unopposed by his 40 mostly supine Labour councillor colleagues at their group annual meeting tonight.

But a bloodless coup at the equivalent meeting of Conservative councillors in Spelthorne in Surrey on Monday night, their leader Ian Harvey lost his position, and with it the Tories lost overall control of the council for the first time in history.

Harvey had overseen the small local authority investing £1billion in property deals around the country, all in an effort to raise funds to pay for council services.

Ousted: Spelthorne councillor Ian Harvey

This casino-style management of public finances had put Spellthorne (one of the country’s smallest councils) at the centre of growing concerns about the commercialisation of local government, as increasingly councils are dabbling in areas in which they have little, if any, expertise, such as property investment and development.

In a huff over his ousting, Harvey, his wife Helen, also a councillor, and four others quit the Conservative Party yesterday to form the United Spelthorne Group on the council, where the Tories are now the biggest group, with 17 councillors, but do not have an overall majority on the 38-seat council.

It has been reported that Harvey is seeking to form a coalition with the council’s LibDems, Greens and Labour councillors which would keep him as leader of the council. The Conservatives have called on the six rebels to resign their seats and stand in by-elections.

Gareth Davies, the former Croydon Advertiser reporter, has been covering the Spelthorne saga, and other indebted councils, for the Bureau of Investigative Journalism. He has written today, “A well-placed source told me a ‘growing number of councillors had become more and more concerned’ about [Spelthorne’s] investment policy, driven by Harvey, which saw the tiny Surrey authority spend £1billion on commercial property, fuelled entirely by borrowing.

“I’m told there had been growing discontent with his leadership (including a narrowly defeated no confidence vote earlier this year) with culminated in a formal challenge at the local party’s AGM on Monday. In response Harvey stood aside.”

Of course, no such thing could ever possibly happen in Croydon, which has been a paragon of civic virtue in the manner in which its finances are managed.

To read more of Davies’s report on the Spelthorne shenanigans, click here.

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