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Jeremy Hutton is a policy analyst for the Taxpayers Alliance.

At the TaxPayers’ Alliance, we spend a lot of time exposing waste by government departments. Vanity projects like HS2, the extraordinarily high foreign aid budget, and the £40bn public sector pensions liability come to mind. But some of our most rewarding and important work is at the local level, travelling around the country with activists to hold local councils to account. Many ConservativeHome readers will know us for our annual Town Hall Rich Lists, which have become the bane of council officers everywhere. But we also believe in congratulating and promoting best practice, as there are undoubtedly councillors out there really making a difference and doing their best to represent taxpayers.

Over the past few months, we’ve received several tip offs from activists concerned about their local council investing in private sector ventures and property portfolios, putting their hard earned money at risk. Of course, the question of whether councils should be doing this, in principle, is complex. Some local authorities argued this investment provided alternative revenue streams, protecting residents from painful council tax rises. As Councillor Ferris Cowper argued at our panel discussion on the topic (which you can view here), this represents a new frontier for public finances in local government. But investing in property, assets or ventures presents risks as well as opportunities, and taxpayers are right to be concerned about the experience and ability of those in the public sector making investments with their money.

Putting that debate to one side, these practices generate more immediate issues. The obvious question is how local authorities will handle these buildings when they’re not being utilised, for commercial purposes or service provision. Nobody would begrudge a council for using an owned property to assist with the delivery of essential services, like social care provision, or even providing a space for a youth centre or sports facility. Alternatively, councils could rent these properties out to local businesses, providing a steady cash flow for the council and promoting economic activity in the local area.

But what if a local council leaves a property entirely vacant, awaiting these opportunities? It’s this limbo which we explored in our recent paper, Hollow High Streets.

We were surprised to discover, after sending a freedom of information request to every council in the country, that at least 6,047 council-owned commercial properties were declared vacant between January 2016 and December 2017. The total cost to taxpayers of providing security, insurance, maintenance and renovation of these properties was £74,022,381. The most expensive vacant property was the renovation of Aberdeen Art Gallery, which has been plagued by delays amid fears costs have spiralled beyond its £30 million budget. The delayed opening has reportedly cost Aberdeen City Council hundreds of thousands in lost revenues alone.

The vast majority of councils in the UK confirmed they owned commercial properties which were being left vacant. Many of the responses we received did not include details of precisely why these properties were being left unused, but we did try to be fair in our reporting by making it clear there may be valid explanations. Only 21 councils confirmed with the TPA that they didn’t own any vacant property, and they are highlighted in our report: Castle Point, South Bucks, Stafford and Watford, to name a few.

Per person, Scotland and Wales were found to be the areas with the highest number of empty municipal commercial properties. Conversely, the areas with the least empty commercial properties per person were London and Northern Ireland, perhaps indicating a greater sense of urgency for housing and pressure on councils to use up all the space available.

Of course, there may be valid explanations for some of these properties, for example if renovations are taking place to improve the value of the property. As one councillor in Swindon pointed out, that council’s property portfolio generated a net profit with empty properties only costing an average £25 each per month. This ensures they can remain preserved for future use when they might start generating profit. Inverclyde council made clear that substantial renovations sometimes were simply necessary to keep distinctive buildings in use, as was the case with the James Watt memorial college.

But this report did highlight some cases of empty properties on high streets which could be sold at a profit for the council, and put to far better use. With a high demand for housing, especially housing located close to train stations and public transport, vacant properties on high streets could be converted into housing.  As Shelter Scotland made clear in their response, councils should be taking a “strategic approach” to bringing empty properties into use to increase housing supply. Alternatively, this space could be made available for local start ups and businesses.

There is no one size fits all approach for councils when investing in property, but we do hope that our research has helped start a conversation in some local areas where vacant properties could be put to better use.

 

9 comments for: Jeremy Hutton: There are 6,047 empty council-owned commercial properties in the UK – what a shocking waste

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