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grey_man last won the day on December 19 2019

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  1. Spelthorne council’s secret rent deal will cost £4.5m Andrew Ellson | Gareth Davies Friday June 26 2020, 12.00am, The Times A council that has bet more than £1 billion of taxpayers’ cash on commercial property has secretly let a key tenant put off paying millions of pounds in rent because of the coronavirus pandemic. Spelthorne council in Surrey is said to have agreed an 18-month rent deferral with WeWork, the troubled property management company, amounting to a £4.5 million short-term loss for the authority. The deal is likely to add to fears that families across the country face higher council tax bills and reduced public services as local authorities’ multibillion-pound bets on commercial property turn sour. Councils across the country have borrowed £6.6 billion since 2016 to buy shopping centres and office blocks to replace revenue lost by government cuts. Council finances, however, are now taking a hammering as tenants default on rent. A report leaked to the Bureau of Investigative Journalism, a non-profit organisation based in London, and seen by The Times, claims that three senior councillors at Spelthorne agreed to the company’s request to help it “absorb difficulties brought about by the Covid crisis”. The deal calls into question the council’s investment strategy. With other tenants struggling to pay rents owed to the council, the provision of local services is threatened. In the past five years Spelthorne has borrowed more than £1 billion to buy offices and shops so it can use the rental income to help fund local services. The purchases include £40 million spent on a shopping centre weeks before the lockdown. Nearly £10 million of Spelthorne’s annual spending on services is now funded by its investments — more than the money from council tax, business rates and government grants. The report claims that senior councillors agreed to the plan with WeWork. The councillors admitted that they would struggle to find another tenant for the Hammersmith Grove offices in west London. They would face significant costs if WeWork had to leave the building. The council bought the building for £170 million in January 2018. In exchange for the rent deferral, WeWork is said to have agreed to extend its 20-year lease by a further five years. This effectively means that Spelthorne council would only start recouping the lost income from 2037. WeWork is itself facing great financial difficulty. The US company, which sublets space to freelancers and small companies, has laid off 2,400 staff around the world after its stock market flotation failed. It is undergoing a second round of redundancies in Britain. The council is also believed to have granted a rent deferral, for 13 months, to a tenant at another of its investment properties, the £73 million Porter Building in Slough. It is unclear whether the council can afford to offer deals to its other tenants. It had 41 “commercial clients” connected to its property portfolio in June last year. Before the crisis the net return on the council’s property investments was less than 1 per cent after costs and reserve funding. The WeWork deal was allegedly voted through behind closed doors on Monday morning by a special investment committee that only has three voting members. The committee included Ian Harvey, who had been the council leader who led the £1 billion investment programme, and his wife, Helen, who was appointed by her husband as the council’s cabinet member for investments. Mr Harvey resigned as council leader at a meeting last night, however, before a motion was brought calling for him to be removed. John Boughtflower, a Conservative councillor, was voted in as his replacement. He pledged to launch an investigation into the £1 billion investment programme. He said that his first action as leader would be to introduce a spending limit so “no single person will ever again have authority to spend tens of millions of pounds without the scrutiny that residents expect and deserve”.
  2. I suspect it's already a car crash and some of it would have been a problem without what is happening. The argument that the council has been fond of making - that it's low risk because of the underlying value of the assets - looks increasingly frazzled. For those investments with little or no asset value - Redwood and Together Energy - other questions should be asked and not just by keyboard warriors like me. Councillors should be doing their job. I also wonder when the local media (I'm watching you :)) will report on that story that the council has decided not to go ahead with the £220 million purchase of a property portfolio in Trafford that was on the market for £200 million. Maybe local journalists are unaware but it's been in the regional business press. Again, there needs to be far more scrutiny of this and the reasons behind it. PS - The council's Moody's rating was downgraded last year. Normally WBC issue a press release about their healthy credit rating but not this time even though the rating remains good. Also Moody's notes that one of the reasons the council enjoys a good rating is because the government won't let a council fail completely.
  3. And from The Guardian MPs investigate commercial property purchases by councils Parliament’s spending watchdog has launched an inquiry into purchases of commercial property by local authorities, amid fears that the coronavirus pandemic will expose councils to a drop in income from their investments. The public accounts committee will look into whether local government officials have the commercial skills required for such transactions, which have rocketed over the past four years. MPs will also question officials from the Ministry of Housing, Communities and Local Government over how much they monitor commercial activity among local authorities and their exposure to risk. Local authorities have been on a shopping spree in recent years, buying up property such as shopping centres and office buildings as a means of increasing their revenues and to offset the impact of austerity measures introduced in 2010. A recent report from the National Audit Office (NAO), which scrutinises government spending, found that local authorities spent an estimated £6.6bn on commercial property from 2016-17 to 2018-19, compared with £460m during the preceding three years. The pandemic is expected to create a hole in councils’ budgets due to a huge shortfall in council tax income, along with lost revenues from missed parking and leisure fees during the coronavirus lockdown. Ministers are expected to provide English councils with a £1bn bailout to prevent several of them from collapsing into insolvency due to soaring costs related to the coronavirus crisis, such as for providing extra social care and housing rough sleepers during the lockdown. Even before the government lockdown created uncertainty about local authorities’ income, the NAO report warned of the risks associated with commercial property, which could leave councils badly exposed by a recession or property crash. “Income from commercial property is uncertain over the long term and authorities may be taking on high levels of long-term debt with associated debt costs,” the NAO said. Councils have been able to access low-cost funding from the government’s public works board, but critics argue it has caused them to bid higher amounts for property, and in some cases overpay. Spelthorne council in Surrey, a tiny Conservative-controlled authority, has used these Treasury-backed loans to build a £1bn property portfolio, despite its annual operating budget of £22m. The council said last year that income from commercial property allowed it to offset £2.5m of government grants cuts, and raised more income than council tax. Shropshire council has previously been criticised for spending £51m on three shopping centres in Shrewsbury, all of which had fallen in value by almost a quarter even before the pandemic.
  4. To be fair to the council I think this is why Time Square is the right thing to do. But even that is - at best - going to be harmed by what is happening. Cineworld was already a bit wobbly even before this and I can't see any of the bars and restaurants they may have been in conversations with going unaffected either.
  5. Below, from The Times with a worrying conclusion. Did anybody pick up on the news in the business media that WBC has just shelved plans to spend £220 million on commercial property that was on the market for £200 million? They need to be coming under far more scrutiny from councillors, the government and the media. I suspect that their current investment strategy is now a millstone for the town. Authorities’ big gamble on property deal-making puts locals on shaky ground Martin Shortland spends most of his time working as an IT consultant, but last year the 52-year-old declared war on Spelthorne council. Frustrated by what he sees as a lack of transparency at the Surrey authority, which has racked up £1bn in debt by buying commercial property, Shortland set up It’s Our Spelthorne, an action group that aims to hold local representatives to account. “If council taxes aren’t going up and services are still running, people don’t really care because they don’t feel it is affecting them,” said Shortland, from Ashford. “But what’s going to happen if this all goes pear-shaped?” Over the past five years, a raft of local authorities have tapped cheap government debt to splurge more than £6bn on commercial property, according to estate agent Savills. The coronavirus crisis means that their residents could end up paying through higher taxes or degraded services. With the nation’s shops, bars and restaurants forced to shut, only about a third of their £2.5bn of quarterly rents were paid last month. Cash-strapped tenants are unlikely to loosen their purse strings by the next quarter. Some will simply not survive. “These retail centres are quickly going from being a cash generator to a cash drag for councils. Ratepayers will end up with a load of council-level debt racked up from bad decision-making,” said Sam Resouly, a partner at investment firm Trinova. In many instances, local authorities have bought shopping centres in their own areas from private owners too beset with debt to invest in improving them, aiming to bring on regeneration. More controversially, some councils, such as Spelthorne, have bought elsewhere, hoping that the income generated will exceed the debt costs and offset some of the 25% budget cuts they have suffered in the past decade. Spelthorne spent £40m in February on the Elmsleigh centre in Staines, where the council is based. Tenants include troubled retailers such as Topshop and New Look. The office provider WeWork, which is skipping rent payments in an attempt to survive, is lead tenant at a west London block bought by Spelthorne for £170m in 2018. Councils typically take out cheap 30 – 40-year deals from the Public Works Loan Board (PWLB), which does not cap the amount they can borrow or require them to prove they can afford it. The debt binge has caused alarm at the Treasury, which increased the PWLB loan rate last year by one percentage point to 2.8%. Concerned that property speculation was depriving councils of finance for more conventional projects, the Treasury opened a consultation last month on revising the lending terms. Councils are on the hook to the private sector, too. Some have used “income strips”, where institutional investors make an upfront payment in return for inflation-linked repayments over decades. Two years ago, Gravesham council in Kent struck a 50-year income-strip deal with Aviva to finance the redevelopment of a tired retail mall into a bright and airy arcade. Last week’s launch party for the Rochdale Riverside centre was scuppered by Covid-19, but the Greater Manchester borough’s ability to pay down £80m of inflation-linked debt over 35 years may cause a far bigger headache. Since some of these deals were struck, the retail market has worsened significantly. Councils have spent £1bn on shopping centres in the past four years and bought more than a third of all those sold last year, according to estate agents Knight Frank. Analysts at Jefferies forecast that rents will fall by 14% this year and by another 7% next year. “Using income strips on shopping centres with public money is scandalous. Some of these council leaders will end up in front of select committees over this,” a leading property agent said. While many in the private sector are quick to criticise councils, they look at investments on a shorter time horizon than public sector bodies, which are also motivated by broader societal and economic benefits. “People working for councils are not muppets. Are they experts on shopping centres? No. But do they understand finance and risk? Yes,” said Mark Williams, a director of the investment firm RivingtonHark. Councils cannot be blamed for failing to foresee the coronavirus carnage, but that does not mean it will not hurt. According to Tony Travers, a professor at the London School of Economics, PWLB repayments rank above all other council outgoings — meaning that while the risk of outright default is negligible, some authorities will be forced into raising taxes or cutting services.
  6. What statistics? I know the pilot schemes showed no decrease in injuries so the decision to use them as the basis for a blanket 20 limit was baffling. But what has happened since they were introduced? I'd guess equally no impact otherwise we'd have been told.
  7. From the FT today. Auditor raises alarm at £6.6bn council property spree Fourteen-fold increase in deals as local authorities seek to plug funding gap The UK government’s spending watchdog has raised the alert over local authorities pouring billions of pounds into commercial property at a time when many private investors are shying away from the sector. The National Audit Office found councils had spent £6.6bn on shops and offices between 2017 and 2019, a 14-fold increase compared to the previous three years. Meg Hillier, chair of the public accounts committee, said it was understandable that councils were carrying out “risky investments” to get more money in. “However, a fourteen-fold increase in spend on commercial property raises serious alarm bells,” she said. “The [communities] department needs to take stock and ensure that there is protection for local taxpayers from local authorities acting as investment bankers. ” The NAO found the investments were focused on a small number of local authorities, with 49 out of 352 carrying out 80 per cent of the deals. Local authorities in the south east of England were highly active, accounting for 53 per cent of commercial property spending in the past three years. Spelthorne borough council in Surrey has blazed a trail, building up a portfolio of nearly £1bn of commercial property including BP’s £358m business campus in Sunbury-on-Thames. Other big spenders include Warrington borough council and Eastleigh borough council. Councils investing in property have seen “significant increases” in debt and in the cost of repayment, according to the authority. Some councils have justified their purchases as a way to ensure the survival of shopping centres or offices in their local areas — or to carry out regeneration projects. Local authorities face potential investment risks from buying commercial property, such as in the event of an economic recession or a downturn in a particular economic sector. But many have been investing in other parts of the country: 38 per cent of spending in the three-year period was on properties outside the buying council’s own geographical area. The NAO said there was a growing trend of authorities speculating in real estate to make up for deep cuts to their budgets: “A key motive of some authorities’ recent investments in commercial property has been generating rental income in order to offset reductions in their funding.” Local authority spending power — a mix of government grants and council tax — has fallen by 28.7 per cent in real terms since the start of public spending cuts in 2010-11. In a review of 45 authorities’ strategies for investment, the NAO found that all but three identified generating income as a significant objective. “Local authorities face potential investment risks from buying commercial property, such as in the event of an economic recession or a downturn in a particular economic sector, particularly where authorities are dependent on their rental income to keep up with debt repayments or fund local services,” the watchdog said. “The scale of spending and borrowing by some authorities in recent years leaves them potentially exposed to these risks.” Retail property in particular has been under relentless pressure with rents falling as competition from online shopping has forced traditional outlets into administration. Some councils had mitigated risks by recruiting specialist staff, undertaking due diligence and using external expertise. “Nonetheless, local external auditors indicated to the NAO that there was room for improvement in the governance and risk mitigation arrangements of some authorities,” the report said. The Ministry of Housing, Communities and Local Government (MHCLG) is responsible for the framework of statutory codes and guidance that set the parameters for local authority borrowing and capital spending. It has recently tightened up that guidance. But the NAO said: “Recent activity has raised questions about the extent to which MHCLG can rely on the framework in its present form to support local authorities to make decisions which provide the taxpayer with good value for money.” The NAO identified various risks including “specific risk” — such as the length of the lease of the financial strength of tenants — as well as “systematic risk” in terms of market movements in commercial property. “In recent years, systematic risk is apparent in the performance of the retail sector with the shift to online sales, among other factors, leading to growth in vacancy and void rates,” it said.
  8. People can have lots of reasons for remaining anonymous Geoff, only some of which are malicious. You and I have communicated under my real name and I have no problem doing so in direct interactions. I just don't want to do so on a public forum. Talking of this though, how often do we see the council hiding behind an anonymous 'spokesperson' whenever anything controversial happens or on an issue which has the potential to cause an individual a problem? You'll find councilors and senior officers queuing up to be associated with good things, yet the moment anything goes wrong or needs somebody to be held accountable, suddenly the only person available is 'a spokesman'. Here's a perfect example from the other day. https://www.warrington-worldwide.co.uk/2020/02/04/progress-being-made-on-refurbishing-swing-bridges/ Then you have the council's propensity to blame people who have died or retired. Did nobody at the council really notice about the payments for Hatters Row for 30 years until somebody was in the ground? Do you object to all of that? Especially from people who are on six figure salaries precisely because being accountable is what they are supposedly paid so much for. And one person in particular. Naming no names obv but you know who I mean. He suddenly found out about Hatters Row when the person he claims is responsible had recently died? Do me a favour. Let's call this person at the council Simon Brushhead to protect his anonymity. He's been at the council at various times for a quarter of a century. And he never knew about this until a former employee was dead? Edit: How could I forget the anonymous Labour councillor who suggested to Chris Vobe that ‘the Labour Party would be better off if you found a packet of razor blades and did away with yourself’?
  9. 'Billywires' was called out several times on the Guardian forum as somebody with an unhealthy obsession with Helen Jones who might find himself subject to some sort of intervention. This would explain why he no longer posts there or here. This report may make it look mild but the kicker was always his worrying paranoia about who might be Helen Jones or in her team, as can be seen by the posts Gary has clipped under the story. It was unhinged and relentless. I disagree with Bill about the scariness. Helen Jones had every right to be worried that some nut was dangerously obsessed with her. It's one thing having a bee in your bonnet, another making literally everything about an individual, saying you know where they've been in public and displaying a range of paranoid delusions about everybody else being part of a conspiracy against you involving that individual.
  10. And they're going to decimalise the number of days in a year which will lead to a massive increase in life expectancy.
  11. Nobody could have predicted that putting politicians in charge of the police would lead to this. 🙄
  12. An interesting exercise to try is to ask Russ Bowden directly the cost of the new offices and the original budget. Maybe Gary could try it. Perfectly straightforward question with a perfectly straightforward answer obviously and one to which the people paying for it are perfectly entitled. I've tried it myself a few times. The council 'spokesman' used to say 'there isn't one' because there's only one cost for the whole project, which is an obvious lie. Now Russ says he can't say what it is because if he does, it will breach commercial confidentiality on the rest of the project, which is utter bullshit. If I spend £30 on shopping, I can tell you what the bananas cost without you knowing the price of the beans. And don't even bother to ask about the business case for the offices or the alternatives considered. Where it gets really interesting is what Russ does after he's pushed. First he'll have some sort of rant based on the idea that he's above this sort of thing and you don't understand and it's all the Tories' fault anyway, then he'll vanish. Works every time. Doesn't even have to be about the costs of his new offices. Works with Redwood, the council's accounts, Steven Broomhead's directorship of Together Energy, Charlotte Nichol's home address, the switching on of Christmas lights. He never wavers from his MO.
  13. You still waiting? Looks good to me and I think everybody hopes it's a great success.
  14. Or vote for neither. It only encourages them.
  15. It's Cathy Mitchell's house. Charlotte Nichols is registered on the electoral roll in Islington so the question is why she gave the Deputy Leader's address as her home address on the nomination form. That may be the breach of the law. I think there are two possibilities. The most generous and likely interpretation is that they're rattled about the backlash to her being parachuted into a safe seat so have pretended she lives in the Borough for the credulous to see on their ballot papers. The other possibility is they've done that and committed electoral fraud at the same time, all under the watchful gaze of the agent and proposer, a Mr R Bowden, the seconder, a Ms C Mitchell, and the returning officer, a Mr S Broomhead. BTW, watch how Russ deals with this sort of stuff. He has a standard MO. He first will make an aggressive assertion about 'mischief' and ignorance of some issue - classically people not knowing the difference between revenue and capital budgets or some stuff about the Tories - then when asked for a supporting detail for his assertion - let's say whether interest paid on capital spending comes out of revenue budgets, the cost of the council's offices, Redwood Bank, why the candidate for North Warrington is registered in Islington but has given her home address as somebody else's, and so on... ...he disappears. It obviously frustrates him that the people of Warrington won't just be told and pipe down. I assume he doesn't respond to the police and the Electoral Commission in the same hectoring tone.
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