By Richard Johnstone | 20 September 2012
Councils should consider buying private buildings and land to boost local regeneration initiatives and create additional revenue, the New Local Government Network said today.
They should also take into account any negative impact on the local economy of selling off their own properties and land, the NGLN added in a report on making better use of assets.More light, more power: reimagining public asset management estimates the accounting value of the total public sector estate in England to be £385bn. Approximately two-thirds of these publicly owned assets belong to local authorities, including everything from council offices to leisure facilities and land.
Ministers have been pushing for rationalisation of the public sector estate and in July 2010 set up Capital and Asset Pathfinders involving 11 authorities. At the same time, other councils have been pursuing their own asset strategies.
But the NLGN said the public sector often made decisions on its property portfolios ‘without wider regard for the strategic importance of their holdings’. In the past, this had resulted in assets being sold to the highest bidder rather than being used to achieve the best possible local growth and investment.
If town halls were more ‘creative’ in how they used public sector property and other assets, they could bring in additional funds, the report said. For example, renting surplus space, whether property or land, rather than selling it would provide revenue while also maintaining the asset for the future.
A commercial return of just 1%–2% from the £250bn local government land and property portfolio could generate revenue worth more than £50bn over the next ten years, the report calculated.
Investing in private developments on public land, or in schemes that make use of publicly held assets, would also allow councils to benefit from the increases in the market value of assets, report author Joe Manning said.
Some authorities are already doing this, including Birmingham City Council’s New Street Station redevelopment, Manning said.
The council borrowed money from the Public Works Loans Board to buy the Pallasades shopping centre above the station. This has not only enabled the development of the site but will generate enough income for the authority to pay back the borrowing costs.
Such a ‘reimagining’ of councils’ role in maintaining the public asset base could support jobs and employment opportunities, Manning said. ‘It’s for local government to take the lead on this,’ he told PF.
NLGN director Simon Parker added: ‘It’s crucial that we unlock the power of local government’s assets to drive growth and create jobs. At a time when the property market is flat, councils shouldn’t be selling off the family silver but using it to generate returns for the public purse. A more commercial approach could unlock billions of new investment.’
