Expert warns councils not to sell their assets From Big Issue North, 15-22 May 2016.
A leading researcher has criticised new government regulations forcing local authorities to sell off their assets to pay for reorganisations.
Joel Benjamin, a local government researcher, said the regulations are akin to “handing the keys to the future of local government to City consultants”.
The regulations, introduced by the chancellor, George Osborne, last month, apply to local authorities that want to enact changes such as sharing management teams, collaborate formally with central government, free up land for economic use or invest in reforms to housing and children’s services.
They also apply to fire and rescue authorities, and police and crime commissioners.
Any local authority that would have preferred to borrow to finance the revenue costs of such reforms, as in the past, is barred by the government from doing so.
Instead they must sell off fixed assets, such as property, shares or bonds.
Benjamin said: “Local authorities’ assets will disappear and could be, like in many cases, sold cheap whilst the short term receipts boost will be used to re-cast costly top-down reorganisations and spending on City consultants. I fear most local councillors and the electorate won’t understand until it is too late what’s happening.
“Short term expenses will be buried under this policy by the government, which has already hit local authorities by encouraging PFI projects and blocking loans from the Public Works Loan Board in order to force local authorities to borrow money from the City at higher rates.
“In the recent past, the Department for Communities and Local Government (DCLG) has willingly obscured the cost of risky financial products such as Lender Option Borrower Option (LOBO) loans, enabling councils to use creative accounting methods to park toxic liabilities off balance sheet – accumulating significant financial risks to the UK public.
“The DCLG is now handing the keys to the future of local government to City consultants like PWC and Capita, while the true costs of this reorganisation and outsourcing folly are kicked down the road.”
The rules, which will apply for three years, require all authorities to make their initial strategy available online. Currently take-up appears to be slow and none of the nine authorities Big Issue North contacted could say when any strategy would be announced.
A DCLG spokesperson disputed Benjamin’s claims and said: “Our reforms will incentivise councils to sell off surplus assets by allowing them to use the receipts to fund improvements in services local people want.”