THE Odeon Cinema in Basingstoke is among one of the out-of-borough properties bought by Slough Borough Council (SBC) to go.
In order to reduce its £760m borrowing debt and its £479m black hole, SBC will have to sell up to £600m of its properties and save £20m a year over the next five years to balance its books.
Speaking at September’s cabinet when the asset disposal was announced, chief finance officer Steven Mair said this is to make borrowing “more manageable”. From that meeting, there hasn’t been clarity on what assets are to go.
The local authority has 6,700 assets, which are worth a total value of £1.2bn, and external real estate specialists Avison Young are dealing with the operational aspects of disposing of the assets.
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Speaking to the Local Democracy Reporting Service, council leader James Swindlehurst (Lab: Cippenham Green) revealed they will be selling up to £100m of its non-operational properties including the buildings bought outside Slough that are “not loved” by residents.
This includes the Odeon Cinema in Basingstoke – which was purchased by SBC for £8.34m in 2019 – the Wickes store in Wolverhampton, and a Waitrose supermarket in Gosport, among others.
Cllr Swindlehurst said by doing this, it will get SBC “a fifth of the way through” of its capitalisation, which will allow the council to pay back its debt via capital over a 20-year period rather than through revenue before it looks into its properties in the town and operational assets.
He said: “Almost certainly, nearly all of those assets will go quite straightforwardly and for people in Slough, that’s almost a relief because when people think of us selling assets, they immediately worry it’s a building that they use or visit.
“There is a £100m of that stuff that isn’t even in the town and nothing to do with our operational requirement. I think it’s safe to say, and we said this in the plans in September, anything non-operational is prioritised before we start talking about operational assets.”
SBC originally bought the out-of-borough assets believing it was a good way to pump extra cash into revenue, but the yield they bring is “not as generous” the council was led to believe once they accounted for the borrowing costs to buy them.
The council is facing a deficit of £223m for this current financial year and a further £84m in 2022/23, totalling £307m.
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Despite this gargantuan black hole, the 2022/23 budget is balanced after the Department for Levelling Up, Housing, and Communities confirmed yesterday it is “minded” to approve the capitalisation of £307m up to March 2023.
This doesn’t mean the government has given the council the final go-ahead for the local authority to sell its assets and use the funds to pay off its debt.
However, this gives SBC’s chief finance officer the confidence to sign off the 2022/23 budget as “viable” because the government has confidence in the council’s estimates that it will be deliverable.
Historic mistakes and errors have forced the council to go back and work on four years worth of accounts and is hoping to complete this sometime in the summer. Once this is complete, the government will make its final decision.
Mr Mair said Avison Young will take a “very small percentage” of the capital receipts generated from the asset sales, therefore not impacting the council’s budget.
Avison Young will evaluate SBC’s asset portfolio and be telling the council when the best time is to sell the assets to get as much value from sale as possible.
The Odeon Cinema's, like cinemas across the country, value has gone down due to Covid-19 shutting this sector down.
Cllr Swindlehurst said when they see the confidence return to that market and the value restored, their professional partner will advise when to release this and get the best value from it.
He said: “The point is we’re trying to make sure that we sell all of these things very confidently and we can demonstrate best value.”
Since the George Osborne years, who was the former Chancellor of the Exchequer from 2010 to 2016, the council has been revenue poor but capital rich, however, Cllr Swindlehurst acknowledged it will be revenue poor and capital poor once the property sales have been completed.
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