Agenda item

The Committee is asked to review the Interim Asset Disposal Strategy, with a view to forming conclusions and recommendations for the Cabinet on the content.

The Scrutiny and Overview Committee considered a Cabinet report which set out an Interim Asset Investment Strategy. The Committee was asked for its feedback on the report, which would be report to the Cabinet during its consideration of the item. The Deputy Leader & Cabinet Member for Croydon Renewal and the Interim Director of Homes and Social Investment introduced the item during which the following was noted:

·      The paper reflects that the Council accepted the need to review all of its assets and undertake an assets disposal programme, in order to reduce its borrowing requirements and allow for a greater focus on its core business. Any asset disposal would be done with robust governance arrangements in place and in a controlled manner.

·      The strategy would sit together with a new Asset Corporate Plan, which was being created, and to complement the Medium Term Financial Strategy.

·      The Strategy would ensure that best consideration was given by balancing the economic climate against the timing of any disposals.

·      This was an Interim Asset Disposal Strategy, which sought to set the scene and provide a framework for managing the initial proposals. It would lead to the creation of a stronger framework for future years.

·      It was emphasised that retention of any assets past their reasonable life was not good asset management practice and the strategy sought to address this in order to reduce costs, which particularly needed given the Council’s current financial circumstances.

·      Delivery of a successful strategy would be contingent on the use of professional resources, that would need to be brought in to handle specific matters of around the sale and some sites would require public consultation.

Following introductions, the committee was provided the opportunity to ask questions on the content of the report. The first question concerned the Council assets that had been reviewed in the creation of the strategy as it did not appear to have taken account of all Council assets. It was confirmed that the strategy had only looked at property assets as this was the brief given.

As a follow-up, it was questioned why other assets had not been explored, as the ones listed in the report seemed to be those that were easier to review. It was advised that any assets not included would be part of the wider asset management plan, which would be worked on in the coming months. The interim Strategy placed an emphasis on assets that were either costly or difficult to maintain, were easily marketable, had a low value to the Council and had many reputational risks and holding costs. The Committee agreed that further clarification was needed in the report as this criteria could not be clearly identified.

A commitment was given that the wider Asset Management Plan, exploring future and broader assets not included in this interim plan, would be presented to Scrutiny and Overview Committee for feedback prior to any consideration by Cabinet.

It was highlighted that the list of assets under consideration for disposal was set in the restricted Part B of the report.   It was understood that the valuations attached to the list could not be made public due to commercial sensitivity, but it was questioned why the list of assets could not be made public. It was advised that there was several reasons for this, including that some of the buildings being considered were still in use and staff had yet to be consulted.

The Deputy Leader added that he welcomed this challenge and shared the desire for the list of assets, without the estimated receipt value, to be placed in public domain. However, decisions about whether information should be restricted or not was rightly a judgement for officers.

The Interim Chief Executive added that if a developer was watching who had the list, regardless of whether valuation were included or not,  they would be gaining valuable market insight to enable them to ensure that they tried to obtain a deal that was in their interest rather that the Council’s interest. Some of the reasons why things were kept in private was to protect the Council’s interest and it would be helpful for this to be considered more broadly by Members.

It was questioned which stakeholders would be involved in writing the business case and whether the report would include any qualitative aspects to justify the business case. In response, it was advised that the Asset Management estate team would be responsible for writing the business case which would be signed off by the Executive Director. The report would contain qualitative and quantitative aspects to justify each business case for disposal and Members would be sighted as early as possible in the process.

In response to a question about the criteria identified from an organisational point of view to assess the consideration it was advised that an independent valuation was sought which would set the true value of the asset. Other factors which would be taken into consideration, such as the state of the economy, would be included in the business case. In certain cases, assets may not be sold for the highest valuation, due to other considerations such as environmental or regeneration factors.

It was asked when the full asset strategy was put forward there would be further information on potential safeguards, which were thought to be lacking in the Interim Strategy. It was confirmed that detailed governance processes covering every element of asset disposal would be included. These processes would be subject to several stages of approval including the Capital Board before being signed off by the Executive Leadership Team (ELT).

There was a concern that when a property was identified for the first time a Cabinet Member would only be sighted in final stages of disposal when it was too late to affect the decision. It was confirmed that Cabinet Members would be consulted prior to sign off by ELT.

There was a concern that the whole process appeared to be very officer led until final decision stage.  As such it was question what the framework for access to information on disposals would be for councillors. It was advised that officers would work within the current Access to Information Procedure Rules, which would include consultation with Ward Members.

It was questioned whether properties would be sold with planning permission attached, as this may increase their value.  In response, it was advised that there would be a mixture of existing assets with existing planning permissions attached, along with smaller sites put forward unconditionally. In relation to whether the Croydon Park Hotel would be sold with planning permission, in order to achieve its best value, expert advice would be sought on best course of action on this asset.

It was highlighted that the current climate of the covid-19 pandemic may result in a decline in commercial property values. As such it was questioned whether this had been taken into consideration. It was confirmed that potential reduced demand for office or retail space had been taken into account. Any decision to sell an asset would explore the marketability, cost of retaining and the potential benefits of selling.

It was highlighted that it did not appear to be clear at which point in the process value could be added and it would be useful to have specific point address this. It was confirmed that any decision would look at options to bring best value in all instances.

The Chair made a statement, which was supported by the other members of the Committee,  that he was not confident the information presented in the strategy would enable a judgement to be reached on whether the disposal of the Croydon Park Hotel was the right decision or not. The Committee would support recommendations where full evidence was provided, but information setting out other, less viable options, had not been provided.

The Deputy Leader acknowledged the Committee’s position and gave reassurance that upon discussing the matter in detail with officers, he was confident that due diligence had been taken on this matter and suggested that the section covering the viability of other options should be expanded prior to its inclusion on the Cabinet agenda.

A discussion of the restricted information supporting this item, can be found in the Part B section of the minutes.

The Chair thanked Cabinet Member and officers for their engagement with the Committee and the open responses to their questions.

Conclusions

At the end of this item the Scrutiny & Overview Committee reached the following conclusions on the report:-

1.    Although the Committee was satisfied with the approach proposed in the Interim Asset Disposal Strategy, it was felt that there was not enough information included within the report to reach any conclusions on the identified options for the Croydon Park Hotel.

2.    The Committee recognised that there would be considerable public interest in the list of assets identified for disposal, set out in the confidential appendix to the report, and felt that further consideration was needed over how this information could be brought into the public domain.

3.    The Committee highlighted a concern that consultation with Ward Councillors about decisions on assets in their local areas had in the past been intermittent at best.

Recommendations

The Scrutiny and Overview Committee agreed to submit the following recommendations to the Cabinet Member for Croydon Renewal for consideration at the next meeting of the Cabinet:-

1.    That further information be included within the report, for when it is considered by Cabinet, on the potential options for the Croydon Park Hotel to allow a more informed judgement to be made on the best way forward.

2.    That the information set out in the in confidential section of the report be reviewed to establish whether it would be possible to make public the list of assets identified for disposal and if not, further clarity on the reasons should be added to the report.

3.    That the process for consulting and informing Ward Councillors about decisions to be taken on assets in their local area be reviewed, to ensure it was fit for purpose.