Councils using cash from property sales to fund redundancies

4 Mar 19
Councils in England have spent £115m of money raised from property sales on funding redundancies, analysis has revealed.

Since former chancellor George Osborne relaxed rules on councils spending receipts from public assets in 2016, 64 councils in England have spent £381m generated by property sales – a third of which (£115m) was used to make staff redundant, according to the research by the Bureau of Investigative Journalism and Huffpost UK.

Previously, when a local authority sold off an asset, it could only use the money to fund the cost of replacing that asset. However, changes introduced by Osborne allowed councils to spend those receipts on cost-cutting measures.

Freedom of Information requests submitted by the Bureau revealed that councils that made the most of this law change had a redundancy rate 75% higher than councils that did not.

In Bristol, the number of council workers made redundant has jumped ten times since the change, from 39 in 2015-16 to 401 in 2016-17.

Simon Edwards, director of the County Councils Network, said: “In rural England, county authorities face a £3.2bn funding gap by 2020, largely due to costs outside of their control.

“It is therefore inevitable that councils have had to reduce highly-valued services to a minimum, with discretionary services disappearing and new charges introduced for services ranging from black sacks to parts of social care.

Urban councils also used asset receipts to fund redundancies, with five London boroughs doing so. Haringey spent £8m this way and job losses increased 70%, according to the data.

Northamptonshire County Council agreed the sale of its brand new council headquarters in April last year for a sum of £64m. This was the single most valuable asset sold since 2016, the research found.

Andrew Gwynne, Labour's shadow communities and local government secretary, said: “Austerity has hollowed out the heart of our communities. This report reveals the shocking disposal of our community assets under the Tories.

“Cuts have forced many councils to sell off their parks, community centres and libraries; cut back on staff and the neighbourhood and care services that all of us rely on; and push up council tax – just to keep the lights on.”

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