Somerset Conservatives are calling for greater transparency over the disposal of millions of pounds worth of commercial property owned by Somerset Council.
A motion being brought to Full Council on Wednesday 16th September by Leader of the Opposition Cllr Diogo Rodrigues and Cllr Andy Dingwall, calls for a single public report setting out the financial outcome of commercial properties that have already been sold.
Somerset Council inherited a significant commercial property portfolio from its predecessor authorities when the unitary council was created in 2023.
The overall portfolio had originally been acquired for approximately £301 million.
Published figures show that 28 properties originally acquired for approximately £167 million have since been sold for around £128 million.
Further properties, originally acquired for approximately £134 million, remain in council ownership and were reported as having a current valuation of approximately £79 million. Published reporting has consequently estimated a potential difference of around £90 million between the original acquisition cost of the overall portfolio and the combined proceeds from properties already sold and the current value of those remaining.
The motion calls for residents to be given a clear breakdown showing, for every commercial property already disposed of, which property was sold and which predecessor authority acquired it, its original acquisition cost, its most recent valuation before disposal, the amount it was sold for, and the resulting capital gain or loss against its original acquisition cost.
It also calls for an overall summary showing the total acquisition cost, sale proceeds and resulting gain or loss across all completed disposals.
Cllr Diogo Rodrigues, Leader of the Opposition on Somerset Council, said: “We’re talking about very significant sums of public money, and Somerset residents deserve to be able to see clearly what has happened to it. I want there to be a clear and transparent public record of what has happened to taxpayers’ money. Council officers have confirmed that the information requested is held and can be reported with ‘little resource implications’.”
The council’s Monitoring Officer has also confirmed that the council has the legal power to publish information relating to its commercial property portfolio and disposals, although officers would need to consider whether any individual information remains subject to commercial confidentiality.
Councillor Bill Revans, LibDem Leader of Somerset Council rejected the accusation of lack of transparency: “We have already been transparent about these details, which were made available to the press on the 26th June and have been written about publicly by the BBC and through the Local Democracy Reporting Service.”
“The Commercial Property portfolio was acquired by all four District Councils before the UK commercial property market was hit by Brexit, Covid and Liz Truss’s disastrous budget. For many councils, like Woking, Slough and Thurrock this risk has made their future untenable and they have had section 114 bankruptcy notices.”
“Somerset Council took the decision to reduce the risks of the commercial investment portfolio through a planned and prudent programme of asset sales. Some of these were sold above and many below the amount paid for them. This reflects the national and global changes in the market and interest rates, especially the decline of retail and out-of-town office accommodation.”
“When income is taken into account since the first purchases (by Conservative-run Mendip District Council in 2017) the commercial investment portfolio has made a small surplus of £17 million.”
“All the details of individual transactions are published in confidential papers as they are commercial at the time of decision making. This was the same with all predecessor councils, including those from Conservative run Sedgemoor Council, but are available to all elected members. All Somerset Council members are welcome to attend and ask questions at the Property and Investments Sub-Committee that deals with these issues, so they can receive proper democratic.”
“Proceeds from the sales have been used to reduce overall council borrowing and fund services through a capitalisation directive as part of ‘Exceptional Financial Support’ permitted by the Government. Transformation costs have also mostly been covered by capital receipts, under Flexible Use of Capital Receipts.”
“This approach was clearly the best of the options available to the council. The Conservatives have never outlined how they would have avoided the bankruptcy their former SCC leader admitted was inevitable, when he privately described the council as “going bust” to a Conservative MP and publicly with a financial ‘time bomb’.”
“The LibDem administration has worked hard to avoid a Section 114 notice by making the tough decisions that were avoided by the former Conservative administration and their One Somerset business plan that has been publicly criticised by CIPFA.”
