Revealed: How north London councils sold off assets to make ends meet
- Credit: Archant
Haringey Council used some of the cash raised from disposing of publicly-owned land and buildings to pay for redundancies, an investigation has found.
Haringey Council has used some of the cash raised from disposing of publicly-owned land and buildings to pay for redundancies, an investigation has found.
According to Freedom of Information data, three North London councils – Camden, Haringey and Barnet – have made £684million over six years in capital receipts, the term given to non-recurring income from one-off sales.
Care homes, council houses, community centres and a football club are among the sites that passed into private hands, mostly to pay for capital expenditure elsewhere.
But Haringey also used some of the cash from to pay for “service reforms”, including nearly £8million to help meet the cost of redundancies.
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According to research by the Bureau of Investigative Journalism, Haringey is one of 64 local authorities to have used capital receipts in this way since 2016.
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.
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“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.”
Haringey has made £122m in capital receipts since 2014/15, and provided information about 28 of the assets it disposed of in that time.
Early sales included the Hornsey High Street depot, which was sold to Sainsbury’s for £14.1m in January 2015, and the Technopark in Ashley Road, Tottenham, sold for £9m that March to make way for the Harris Academy.
Cash earned through capital receipts is normally ring-fenced for buying other property, but since 2016 changes to government guidelines have allowed councils to use them “flexibly” for service reforms.
Haringey used the income from selling assets in this way to pay for more than £2.1m of service “transformation” in 2017/18.
But it was also one of five local authorities in London to deploy some of the money from capital receipts towards meeting the cost of staff redundancies, spending £3,949,416 in 2016/17 and £4,041,664 in 2017/18.
Overall, some 259 people were made redundant from the council in 2017/18, a notable rise on the 152 of the previous year and followed by 132 more in 2017/18.
The council’s total reserves dropped by 38.6 per cent between 2016 and 2019.
Cllr Richard Watts, Chair of the Local Government Association’s resources board, said: “Between 2010 and 2020, councils will have lost almost 60p out of every £1 the government had provided for services. With staffing being one of the biggest costs for councils, this has led to the number of people directly employed by local government falling by almost a third in 10 years.
“Having been given the flexibility, it has made sense for some councils to use capital receipts while they can to manage this substantial transformational change.
“This is not a sustainable, long-term way to support councils’ budgets. With councils in England facing an overall funding gap of £8 billion by 2025, securing the financial sustainability of councils and local services must be the top priority.”
From 2016/17 Haringey received £55m in capital receipts, with the former base of the Maya Angelou Family Contact Centre in Keston Road sold for £3.6m to be re-developed for affordable housing. The service has since moved to nearby Winkfield Road.
Elsewhere, the eastern part of the Ashley Road depot was sold for £1.4m to the Harris Federation for sports facilities, and the Kurdish community centre in Green Lanes for £593,000 to local organisation the Yek-Kurd Community Interest Company.
The council declined to comment on the record.
Camden and Barnet: What else has been sold?
Between 2014/15 and the first quarter of 2018/19, Camden raised a grand total of £474.9m in capital receipts.
As we reported at the time, the local authority raked in more than £200m from property sales in 2014/15 alone.
These included council offices at Bidborough House, which were sold to UCL for £28.9m, and at the Town Hall Extension in King’s Cross, which was sold for £59.9m and is now set to be developed into a 270-bedroom hotel.
More recently, the council received £11.2m for Wells Court, the 1880s former site of a sheltered housing scheme in Oriel Place, Hampstead, in June 2016.
St Margaret’s Care Home in West Heath Road earned Camden £10.8m when it was sold in July 2016, while in December 2017 the former Drill Hall Theatre in Chenies Street was snapped up by RADA for £3.4m.
A plot of land at 156 West End Lane, which had been used as a builders’ yard since the 1970s, earned the council £22.6m when it was sold to A2 Dominion.
In Camden any property worth £2.5m or more cannot be sold without cabinet approval, and any funds from the sale of council housing can only legally be spent on other housing assets and services.
Richard Olszewski, cabinet member for finance and transformation, said: “The council’s property portfolio is regularly reviewed, and robustly challenged when required, to ensure that we are making the best use of our available assets.
“Reviews held in recent years identified a number of properties that were surplus to the council’s operational requirements.
“Some of these have been sold to fund the Community Investment Programme (CIP), which has delivered much-needed affordable housing, including the first council homes in a generation, schools and community facilities to the borough. This has been undertaken with virtually no funding support from central government.
Barnet Council made almost £87.4m in capital receipts over the same time period, with £40.2m coming from council dwellings.
The depot opposite Mill Hill East station earned £32.4m when it was sold in 2015, with the brownfield site now set to be re-developed as part of the Millbrook Park project.
The eventual freehold sale of Hendon Football Club to Montclare Developments Ltd in 2015/16 brought a grand total £2.3m into council coffers.
And the historic former park keepers’ lodge in Victoria Park, Finchley, which was sold in 2016 despite hundreds of objections, earned the council £623,000.
A Barnet Council spokesman said: “Decisions to sell publicly owned assets are infrequent but when they are made, a range of factors have to be carefully considered.
“These could include how the council’s requirements may have changed, any liabilities associated with the land or building and its condition, what value it might have to the wider community, and what part it might play within any wider regeneration of the borough.”
Barnet is now proposing to make flexible use of capital receipts this year, subject to approval of the 2019/20 budget next month. Camden confirmed it has no plans to use capital receipts to fund redundancies.