COMMENT
Councils looking to redevelop their estate – not just sell it off
Alex Thomson, chief executive at Localis, talks to PSE about the changing mentality of local authorities in dealing with their land and assets — a theme endorsed by housing minister Brandon Lewis MP. David Stevenson reports.
L
ocal authorities appear to be moving away from the mentality of simply selling
buildings and land for one-off capital receipts, and instead looking to redevelop assets to derive revenue income that they can use to help support public services.
This is according to a new report from think- tank Localis, which highlighted that many councils are seeking, over the next five years, to increase the proportion of ‘redevelopments’ of assets from one-third of all current disposals to a majority of disposals.
In 2013, the Cabinet Office’s Government’s Estate Strategy revealed that the value of public land held by local authorities is approximately £170bn. That strategy argues that the public realm is asset-rich but cash-poor.
Housing and planning minister Brandon Lewis MP, at the September 2014 launch of the Localis report, ‘Public Land, Public Good: Getting maximum value from public land and property’, said: “Now, perhaps more than ever before, realising the value of the land and the property that we manage in the public sector can play a key role in the provision of services for local people.”
He added that it does need a level of commercial acumen, but it isn’t just about selling land, or building houses; “it is about bringing together different parts of the local government and central government family”.
“Public land and assets have been left, I have to say, for far too long to gather some pretty expensive dust,” said Lewis.
Selling properties undervalue
The report highlighted, however, that one in six chief executives said they have been forced to dispose of assets for less than their optimal value, with the need to make savings (42.9%), the need to generate capital receipts (41.7%) and the need to provide sites for residential development (41.2%) being cited as the most common factors.
Richard Upton, chief executive of Cathedral Group, which sponsored the report, said: “Public land is a vital asset for the whole country and we need to act quickly before we lose the opportunity to transform our town and city centres and provide much needed new amenities. Once this land is sold, it is gone forever.
“With the ongoing austerity, local authorities are being put under increasing pressure to make a quick buck, and many simply don’t have the resources or expertise to work creatively with the private sector to keep land under public ownership.”
Two-thirds of respondents also believed that closer integration of public services is necessary to realise the maximum return on their assets.
Alex Thomson, chief executive of Localis, told PSE: “It is vital that local authorities maximise their assets going forward. This forms part of a general shift in local government becoming much more entrepreneurial in how it does lots of its business.”
He added that back in the day when money was plentiful, councils would sometimes strike up deals in which they would give up their land for very little – if they thought something positive would come out of developing that land.
“They’re probably not in that position anymore, especially as the report makes it very clear that land is an extremely valuable asset and when it is gone it’s gone,” said Thomson. “So, we argue, it should be treated a bit differently, and there needs to be more of a ‘custodian’ role adopted over public land because it is important it doesn’t get squandered.”
Asset opportunities
The report revealed that while the Audit Commission’s most recent estimate puts ‘surplus’ local authority assets at a total of £2.5bn, Localis argues that this is likely to be an underestimate.
It said its analysis suggests councils in England are planning to sell and redevelop £13.5bn of their own assets in the next
16 | public sector executive Oct/Nov 14
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