Land and buildings sold by council helped pay for back-office reforms
PUBLISHED: 07:00 04 March 2019
The disposal of publicly-owned assets has earned Newham Council more than £185million over the past four years.
According to Freedom of Information data shared with the Recorder, between 2014/15 and the first quarter of 2018 the local authority received £185,090,000 in capital receipts: the money collected when a council-held asset such as land or a building is sold.
Large parcels of land and former council dwellings are among the properties that have passed into private hands, mostly to pay for capital expenditure elsewhere.
But the council also used some of the cash raised to pay for service reforms, with £3m re-routed into the Newham Transformation Programme in 2017/18.
A spokesperson for the council said: “Land and property owned by Newham Council can go through review, which may result in a sale being seen as best use.
“All sales above the value of £1m go to cabinet for approval in line with council delegation arrangements.
“The disposal value will be determined through an open market competitive process, or supported by an independent valuation from a qualified chartered surveyor, to make sure the council gets overall best value.”
Most of the cash generated is likely to have come from the sale of council houses through Right to Buy, which made the council £32.8m in 2015/16 alone.
Among the other assets that Newham disposed of are:
• The Hallsville Quarter: Local authority-owned land was sold to Bouygues in 2014/15 as part of the Canning Town and Custom House regeneration project, with £3.5m received initially and more than £17m due later in overage.
• Rathbone Market: The site was sold as part of the same programme for an initial £833,000, with more than £10m due in subsequent years.
• Land at Leather Gardens: Vacant land in Stratford was sold in 2014/15 for £930,000 ahead of a housing development designed by Rogers Stirk Harbour and Partners.
• Thornham Grove, E15: Part of the industrial estate in Leyton Road, Stratford was sold in July 2014 for £580,842 to an unknown buyer.
• Land at Atherton Leisure Centre: Surplus land around the newly-rebuilt leisure centre was disposed of on a 250-year lease for £600,000 in 2017/18.
• Land at Royal Docks: A parcel of land owned by Newham was transferred to the Greater London Authority for £500,000 as part of a wider deal to enable the GLA to purchase the Siemens Crystal exhibition centre.
Since 2016 changes to government guidelines have allowed councils to use capital receipts “flexibly” for service reforms.
Newham has used the income from selling assets to pay for more than £3m of service “transformation”, which it said had led to £4m of savings by mid-2018.
This included changes to the business support structure, digital transformation and commissioning and management “delayering”.
According to research by the Bureau of Investigative Journalism, Newham is one of 64 local authorities to have used capital receipts “flexibly” in this way since 2016.
There is some controversy around the practice as other local authorities have used the cash from selling public land and buildings to pay for redundancies.
Andrew Gwynne, shadow secretary of state for housing, communities and local government, said: “For nine years, ministers have sat in meetings in Whitehall and cut funding to councils hundreds of miles away.
“The fact that 64 local authorities have used money from selling publicly-owned buildings to plug gaps in their finances should shame this government into action.”