August 24, 2013
UK Government encourages £1 billion council property sale to fund services
The parlous state of local authority finance in the UK is encouraging councils to behave in new ways and many are making them unpopular. From the greater use of bailiffs to attempts to increase income from local car parks, much of the current thinking on revenue generation has focussed on quick fixes as councils seek to preserve front line services. Whitehall is currently carrying out a technical consultation as it seeks to cut its funding for front line services by 21 percent over the next two years as part of the now annual debate about finding the money to do all the things Central Government expects local authorities to do. One potential solution is the sale of property according to a report that councils may be allowed to sell off buildings and reinvest the proceeds in their operations.
Property Week is reporting that the Department for Communities and Local Government is set to announce that – for a limited period -local authorities will be allowed to sell assets to cover shortfalls in operational budgets and as a way of releasing capital and preserving local services. Currently the revenue from the sale of buildings and other assets can only go to a capital budget to fund the acquisition of other assets unless otherwise approved by central government. Councils are believed to own around £234 billion of assets but only have around £1 billion that are readily available to sell. This is what DCLG would like them to divest.
The initiative is not the only one that aims to reduce the stock of council owned properties. As we reported back in June, the Cabinet Office has launched a pilot of the One Public Sector Estate scheme with 12 local authorities in England which encourages them to work with central government departments and other bodies to share buildings and re-use or release property and land deemed surplus to requirements.