Surplus property assets hindering council income

Local authorities hold around £2.5bn of surplus property assets which could be sold or used to generate income, according to the Audit Commission.
A report released this week said the figure amounts to 1.5% of the value of the total local government estate – estimated at £169.8bn in 2012/13.
The commission said that councils should establish clear strategies to deal with surplus land, in order to get best value for money.
Commission chairman Jeremy Newman said: “To be clear, we are neither advocating that local government starts a wholesale sell-off of their land and property nor are we suggesting councils shouldn’t spend money on buying assets or on investment to improve their existing property.
“What we are highlighting is a group of assets that do not provide immediate benefit to local communities, but still require councils to spend money on maintaining them.”
According to the report, in 2012/13, English councils spent an estimated £5.6bn – about 4% of all revenue spending – on premises-related expenditure.
The report said councils should consider sharing land, renting space within it, investing in it, or selling it. But it added that decisions on the timing of property sales would take account of current market conditions and future service plans.
Between 2004/05 and 2012/13, the total value of operational property assets held by councils in England fell by 30%, according to the commission.
It said: “This was partly due to government policies that encouraged the transfer of some land and property assets, notably housing and schools, out of council control.”
The report said that metropolitan district councils have the highest proportion of surplus assets at 2.6% (£0.9bn) and district councils the smallest at 0.8% (£0.2bn).
Separately this week, a report by the European Commission called on the UK government to consider an appropriate incentive structure to encourage local authorities to speed up the release of land.
It added: “In addition, the government could consider whether there is a case for a stronger regional approach to decisions on the supply of land for development involving clusters of local authorities.”

Photo (cropped) by Nicholas Eckhart