I issued a Press Release ahead of the Public Accounts Committee inquiry into local councils buying commercial property that starts on Monday. The Shropshire Star has used some of it here: https://www.shropshirestar.com/news/business/2020/05/08/council-questioned-over-shopping-centres/
My Press Release in Full: Public Accounts Committee inquiry into council commercial spending
07 May 2020
Commenting on the news that The Public Accounts Committee will look at Shropshire Council’s £52m shopping centre purchase as part of their inquiry into local authority commercial investment, David Walker said: “The purchase of these shopping centres represents a huge risk to Shropshire Council’s finances. Senior administration members seem to have forgotten it isn’t monopoly money they are playing with. Or indeed their own money. They are risking public money!”
The inquiry will be looking to see if the Government Department has effective oversight of the risks to the financial sustainability of local authorities investing in commercial property. The Public Accounts Committee will look at these purchases on the 11th of May.
David Walker is a Civil Engineering Surveyor who has worked in the property and construction industry for over 30 years. He is the Chair of North Shropshire Lib Dems, a former County Councillor and a West Felton Parish Councillor. He said: “The risks of the investment clearly outweighed any potential gain. More so when you consider the perilous state of the Council’s finances. More so given that more prudent investment strategies would have given a better return. More so given that the retail sector was already massively contracting in 2017.
“Arguably investing £52m in the whole Shropshire economy would have yielded more far-reaching benefits for everybody. There is much more to Shropshire than just Shrewsbury after all.
“The fact they didn’t get a proper valuation beforehand just compounds their error. The actual valuation instantly wiped nearly £3m off the price paid. A year later the value had plummeted by over 20% wiping another £11m off the price they originally paid. You have to wonder how the valuation looks at the end of 2019/20… All before Coronavius drove a coach and horses through the economy in the last few weeks.
Shropshire Council purchased the centres through an offshore trust in Jersey. All to avoid ‘millions of pounds’ of stamp duty & VAT. The ownership of the Shopping Centres is still held offshore.
“What planet is the Administation at Shirehall on? It sounds like they are passengers… back seat drivers at best who can’t dictate to the trust under the terms of the deal. A deal very few people have seen. Crazy.
“They would now like us to believe they were being altruistic and just looking to secure the future of the Shopping Centres, but the Chief Executive said it was also about ‘…getting a good return on our investment’ just after the cabinet agreed to the purchase. It shouldn’t take over a year to move ownership onshore. It sounds like they are locked into a bad deal. All at a time while the value of these assets is tanking. A gross misuse of public money if ever there was one.
“This all brings into question Shropshire Council’s ability and capacity to manage a purchase like this. I seriously doubt there is any of either amongst the members.
“The investment adage ‘buy low, sell high’ seems to have passed the administration by in quite the most spectacular way. Ignoring the warning signs is grossly irresponsible.
“If the purchase was desirable the timing of the purchase and the purchase price leaves a lot to be desired. Even a short delay would have allowed them to secure a much better deal. I am sure the previous owners are feeling very pleased with themselves.
“So I hope the Public Accounts Committee do a thorough job and really take Shropshire Council to task.” He concluded.