June 6, 2014
UK local authorities should make better use of their £170 billion estate, including divesting or reusing around £2.5 billion worth of surplus assets, according to a new report from the Audit Commission. The report acknowledges that the estate has already shrunk by a third over the last decade but says there is still scope for councils to be more proactive in the way they manage property, not least when it comes to decisions about the use of idle or underused buildings and land. As the local government estate continues to shrink due to spending cuts and a range of Central Government initiatives such as the One Public Sector estate scheme, it was vital councils understood the properties in their portfolio and regularly reviewed them, according to the report’s authors.
Chair of the Audit Commission, 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.
‘These assets have potential value for councils. While not all such land or buildings may be sellable, councils should consider how much value they gain from surplus assets and how this could be increased. I urge councils to use the data held in the Commission’s ‘Value for Money (VFM) Profiles Tool’, such as spending on and value of land and property assets and ‘surplus’ assets, alongside their unique and detailed local knowledge, to regularly review if their estate is fit-for-purpose.’
Town halls also need to link the management of this valuable resource to the wider strategic ambitions of their authority, Newman added. ‘Councils should ask themselves – do we have an appropriate estate? In order to extract the most value from their assets, councils should not sit on valuable land and buildings that can be better used as a resource to support their wider service and strategic objectives. This might mean selling or transferring them, or investing in them to make them fit for purpose. Ultimately, councils know their population and their associated needs. They require the freedom to choose the approach to managing these assets that best suits their needs.’
However, the Chartered Institute for Public Finance & Accountancy has criticised the report’s conclusions. Alison Scott, the assistant director of local government finance at CIPFA, said: “To highlight surplus assets in this way does not present an accurate picture of how local authorities manage their assets. The reality is that at any one time local authorities will be holding a range of assets for future use or to make sure that they can achieve the best value possible for them in the longer term.”