Agenda item

The Scrutiny & Overview Committee is provided with the confidential (Part A) Cabinet report setting out decisions to be considered by the Executive Mayor on asset disposals and an update of the Community Asset Transfer Policy. The Committee is asked to: -

1.   Review the information provided in the Part A & Part B report on Asset Disposals and updated Community Asset Transfer Policy, and

2.   Decide whether there are any comments or recommendations on the scheme to bring to the attention of the Mayor during his consideration of the report.

The Committee considered a report set out in the agenda supplement that presented a draft Cabinet report updating on the first tranche of asset disposals, identifying assets for potential disposal in tranche 2 and setting out an updated Community Asset Transfer Policy. This report was included on the agenda to allow the Committee to conduct pre-decision scrutiny on the decision in the report, allowing any concerns or recommendations to be highlighted to the Mayor when taking the decision at the Cabinet meeting on 6 December 2023.

The following people were in attendance at the meeting to answer questions during the discussion of this item: -

·       Jason Perry - Executive Mayor of Croydon

·       Councillor Jason Cummings – Cabinet Member for Finance

·       Katherine Kerswell – Chief Executive

·       Jane West - Corporate Director for Resources & Section 151 Officer,

·       Elaine Jackson - Assistant Chief Executive

·       Huw Rhys-Lewis – Interim Director of Commercial Investment & Capital

During the introduction to the report, the following points were noted: -

• The report presented the second tranche of assets targeted for disposal. As the asset disposal process progressed, it was recognised that the process would become more complex as the easier disposals had been targeted in the first tranche.
• It was not necessarily the case that all Council assets would be sold, with options such as extending current leasing arrangement or identify assets for Community Asset Transfer to be considered on some properties.
• It was highlighted that due to the short timeline to bring the report to scrutiny before its consideration by the Mayor at the Cabinet meeting on 6 December, it had not been possible to carryout all the expected communications with tenants. Communication with tenants around the potential disposal was ongoing but would be completed before the Council proceeded with any disposal. 

To help inform the meeting, the Chair had invited the Chief Executive of Mind in Croydon, Emma Turner and the Chief Executive of Croydon Voluntary Action, Steve Phaure, to address the meeting on the concern of the local community and voluntary sector about the potential loss of premises leased from the Council as a result of any disposal. From this concern was raised by Mind about the lack of notice of the disposal and the potential loss of confidential spaces for counselling. The CVA raised concern about the potential loss of Cornerstone House and the impact this may have upon the future sustainability of charity and voluntary groups based in the building.

The Vice-Chair detailed for the Committee a visit he and the Chair had made to Cornerstone House prior to the meeting to meet with the various community and voluntary sector groups that were based in the building to learn how the possible loss of the building may affect their ongoing viability.

Both the Executive Mayor and the Cabinet Member for Finance, Councillor Jason Cummings, extended an apology to the tenants who had not been contacted before the list of assets was made public. The Council would work with existing tenants around their leases, which included the potential of extending their current leases. Confirmation was given that there was capacity within the team to deal with the volume of potential lease extensions required.

It was explained that there would not be a consultation on whether the disposal of any of the assets listed for tranche 2 should be included, as the list as presented in the report would be presented to the Mayor for a decision on 6 December. The Council did not want to be in its current position of needing to dispose of its assets but had to do so to address its high level of debt.

It was questioned whether it was correctly stated in the report that none of the assets identified for disposal in Tranche 2 would be considered for listing as being available for Community Asset Transfer (CAT). It was confirmed that those properties listed in Tranche 2 were intended for disposal. Any properties identified as potentially being eligible for CAT had been excluded from the list. The key driver for asset disposal was the potential capital receipt that would be delivered through a sale. The lower potential value of an asset, the more likely it would be considered for CAT. It was confirmed that the list of properties available for CAT should be available before the end of the year.

Reassurance was sought that the Council was doing all it could to get the maximum possible value for the assets targeted for disposal. It was advised that the Council had retained the services of professional advisors to provide advice on its disposals. This had led to the targeted figure of £24.5m from the disposals in tranche 2 being reached. It was highlighted that due to the pressing need to reduce the Council’s debt, it was not in a position to make planning applications on assets to maximise their value because of the length of time this would take.

It was confirmed that both the book value and am externally provide estimate were used to provide an indicative sales figure. If the target of £24.5m was reached before all the assets were sold, the remaining disposals would still continue. It was advised that additional resource had been brought into the team to ensure it was able to manage the disposal process at pace.

The final question for this item asked whether the Mayor was comfortable with the final decision on the sale of assets being delegated to officers. It was advised that the delegation was in place to ensure that the disposals could proceed at pace. However, there were caveats in place based around the valuation and the potential sale price which would see decisions referenced back to the Mayor.

At the conclusion of the item the Chair thanked those in attendance for their engagement with the questions of the Committee.

Actions

The Scrutiny & Overview Committee agreed the following actions arising from their discussion of this item: -

1. The Committee agreed that any future reviews of the asset disposal process would look to test that the engagement process with tenants had improved.
2. That a meeting with officers is arranged for the Deputy-Chair, Cllr Ben Hassel to receive an update on the lease length of tenants and discuss how the disposal of golf courses was treated.
3. The Committee requests to be provided with a summary of the outcome from discussions with existing tenants about their lease options.

Conclusions

Following its discussion of the report on Asset Disposals and the Community Asset Transfer Policy the Committee reached the following conclusions: -

1. The Committee noted the progress that had been made to date in delivering the asset disposals identified in tranche 1 and that more sales were needed to help improve the Council’s financial position.
2. Although the opportunity to review the report before Cabinet was appreciated, the Committee was concerned by feedback received from community and voluntary organisations that they had not been notified about potential disposals of their leased premises before publication. As such, the apology given by the Executive Mayor to those organisations was welcomed. 
3. As feedback from the local community and voluntary sector indicated uncertainty about how the proposed disposals would affect their tenancies, the Committee welcomed clarification that there would be forthcoming conversations with the tenants about their lease options.
4. The Committee welcomed confirmation that it was likely the list of properties available for Community Asset Transfer would be available before the end of the year.
5. The Committee welcomed confirmation that additional capacity had been brought into the team managing the asset disposal process to speed up the pace of disposal.

Recommendations

Following its discussion of the report on Asset Disposals and the Community Asset Transfer Policy, the Committee agreed to submit the following recommendations for the consideration of the Mayor: -

1. The Committee recommends that there is preliminary engagement with existing tenants on the possibility of an asset being identified for disposal before any report identifying assets is published.
2. The Committee recommends that local councillors are informed, prior to publication, that an asset in their ward will be listed for disposal.