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‘PROBE SALE OF FAMILY SILVER’ CALL
Watchdog urged to investigate £60m shops auction
A FINANCIAL watchdog is being asked to investigate the sale of 220 Islington Council-owned properties – described as the “family silver” – at what critics claim are knock-down prices.
The District Auditor – whose job is to ensure council money is spent wisely – will be told that the properties, many of them shops, are being sold off “on the cheap” for short-term gain in a “slapdash” way, with council tax-payers being the ultimate losers.
Traders whose premises are to be sold face losing their livelihoods, and in some cases their homes, as a result of being unable to afford to bid for their own shops.
Shopkeepers fear the new owners will charge huge rents, forcing the closure of businesses built up from scratch over many years.
Islington’s opposition Labour group, who have fought a bitter battle against the sell-off, are to ask the District Auditor to investigate. The issue even attracted the attention of London Mayor Ken Livingstone, who in the Tribune last week described the sale as “criminal.”
Islington’s Labour group deputy leader Councillor Richard Greening said the District Auditor had questioned the borough’s approach to asset management in a recent report.
He added: “We have further concerns based on the portfolio sale of 220 commercial properties. We believe there is a case to answer because the borough – that’s council tax-payers – are not getting value for money.”
The properties, mostly in historic Amwell Street, Clerkenwell, are due to be sold by competitive tendering, using sealed bids, later this year. They are expected to raise anything from between £45 million and £60 million.
Islington’s ruling Lib Dems argue that they desperately need the money to rebuild and refurbish schools and properties.
But Cllr Greening believes the sums are all wrong. He said: “For a start, instead of selling the properties, they could borrow against rental income over 20 years. That way you raise the capital but at least keep the properties.
“But it appears the Lib Dems have an ideological obsession with selling everything off.”
The council’s outside independent advisor, Erinaceous, produced an options appraisal weighing up the financial benefits of retaining the portfolio against selling it off.
Cllr Greening added: “That was based on the current rental income of around £2.5 million. But I have seen a new document produced by Erinaceous, which now estimates the rental will to go up 50 per cent to £3.7 million within the next few years.
“My belief is that that, in the long term, the council will lose money. Within 30 years you will hit the break-even point – when the benefit of the sale and having the rent will be equal.
“That’s when council tax-payers will have to pay.”
Cllr Greening said council advisors did not appear to have taken into account just how much property prices will increase.
He added: “It’s unbelievable that the council’s options appraisal doesn’t take into account the
fact that the properties are going to go up in value.
“The council have been slapdash and lackadaisical. Most people who own property these days tend to want to hold on to it rather than sell because they know it is going to go up in value.”
Finance chief Lib Dem councillor Andrew Cornwell refused to comment last night (Thursday). However, a council spokesman said: “This is not the first time we have done this and the District Auditor didn’t have a problem with it before.” |
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One needs to ask why are the children's homes being sold off as well?
Mike Calvert
If you think about it, what Islington Labour are really saying is that they believe it right to gamble £60 million of local people's money on the property market.
Instead of using that cash to pay down the council's huge debts or to improve services, they want to use it to speculate.
Why stop at property? Perhaps Labour would like to increase local Council Tax to buy stocks and shares. After all, good returns can be made on the stockmarket. Especially with other people's money.
Yuan Potts |
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