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Making the most of your assets
Trowers Public Insight

Making the most of your assets

Additional powers announced in the Spending Review are to give local authorities the ability to retain 100% of the receipts from asset sales to spend on public service qualifying 'reform projects'.  The details of the scheme are to be announced later this month but while some regard the proposals as a short-term fix to combat ever decreasing budgets, for many authorities looking to their existing estates to address recent pressures is not a new concept.

Additional powers announced in the Spending Review are to give local authorities the ability to retain 100% of the receipts from asset sales to spend on public service qualifying 'reform projects'.  The details of the scheme are to be announced later this month but while some regard the proposals as a short-term fix to combat ever decreasing budgets, for many authorities looking to their existing estates to address recent pressures is not a new concept.  Indeed a number of authorities are exploring creative approaches to dealing with surplus assets, be it securing efficiency savings or identifying land to assist in the delivery of new housing.


Various options are available to authorities:

  • Simple asset sale – this is the option envisaged by the Spending Review with the principal aim being to generate funds from sale proceeds of surplus assets.
  • Council building – where the main aim is to make better use of under utilised assets, several authorities are pursuing the option of developing out land and buildings, whether themselves or through a wholly owned company.  Authorities can prudentially borrow to fund development and this option can be a particularly attractive for smaller sites which would have difficulty attracting commercial interest but can be built out quickly.
  • Procuring a development partner – involving a private sector partner can bring in external expertise and assist in transferring risk away from the authority though of course will need to deliver a corresponding level of developer profit.  There are a variety of structures available from the more traditional to joint venture arrangements.

There may also be a combination of options with services and amenities being rationalised as part of a redevelopment, enabling consequentially redundant sites to be sold off to generate funds.

As with all new proposals preparation is the key.  Authorities should at the outset identify their aims (and the priority of those aims), as well as realistically exploring the viability of available options to arrive at the solution that best secures value and meets their needs.  Other issues to consider include:

  • Vires – a vires audit is particularly important where an authority is looking to take a more innovative approach to dealing with its assets.
  • Procurement – this will be more relevant where the authority is procuring third party involvement but the issue should also be considered in relation to any wholly owned company.  Use of frameworks can save time and resources if appropriate.  Whether or not any proposals are governed by the EU regulations it will still be necessary for the authority to secure best value.
  • State Aid – while the authority's aim in any asset rationalisation is likely to be securing optimum value for itself it is important to audit any proposed arrangements to ensure they are state aid compliant, particularly where there are joint arrangements with other organisations, including wholly owned companies.
  • Consultation – proposals can be particularly sensitive where they affect existing amenities.  Early engagement with residents and other stakeholders helps to identify issues and look to address these during the initial stages of any proposal.

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