Whitehall officials say the authority has made progress after being issued with the Best Value Notice (BVN) following a review of its finances, especially levels of debt.
But they have warned that they still have concerns about EBC’s position.
In a letter just before Christmas to the council’s chief executive, James Strachan, the deputy director for local government finance at the Ministry of Housing, Communities and Local Government, Suzanne Clarke said: “Whilst we will not be renewing the Notice, we remain concerned about the significant debt which is held by the council and the risk which is carried with this.
“As a result, the council should continue engaging regularly with the department to provide assurance of the steps being taken to reduce and manage its overall debt.
“Should the department deem it necessary to seek further assurance through a Best Value Notice in future, based on the available evidence, a further Notice will be issued.”
In December 2023, the department highlighted that the council had “significant debt relative to its size” – 45 times its core spending power.
The money borrowed had been used to buy a commercial, regeneration and housing investment portfolio. EBC is developing a housing project, One Horton Heath on 310 acres south of Fair Oak. The first of up to 2,500 homes are set to be ready this year.
In November the Echo reported the authority had £350m of debt, working out at £2,500 per resident.
Whitehall officials said there were issues with capacity and expertise in the council’s asset management team, finance and internal audit which government officials said had affected its ability to manage the scale and ambition of the projects.
The department told the council to instigate an external governance review to look at a number of areas including culture and leadership, decision making, delivery of services and its plans to reduce and manage the debt.
In a statement the council said the news the Best Value Notice has been lifted confirmed the findings of two independent reviews that Eastleigh is “a well-run authority with a strong track record of delivering services and a clear framework for governance and performance management.
“Over the past year, we have worked diligently to demonstrate continued robust financial management, strengthen our governance structures, and enhance the capacity of our asset management and internal audit teams.
Leader of the Liberal Democrat controlled council, Cllr Keith House, added: “We are pleased with the outcome, which highlights the hard work of officers and members alike, in providing reassurance that Eastleigh Borough Council is a well-run authority.
“This milestone confirms our ability to meet the challenges of delivering innovative, value-for-money services for our community.”