Sell off plan could drain council funds

PUBLISHED: 17:31 14 October 2009 | UPDATED: 09:10 12 August 2010

COUNCILLORS have slammed the Prime Minister s plans to sell assets to plug a £16 billion hole in the budget deficit. Gordon

COUNCILLORS have slammed the Prime Minister's plans to sell assets to plug a £16 billion hole in the budget deficit.

Gordon Brown announced plans on Monday to sell a "portfolio of non-financial assets" in central government, including the Dartford Crossing and urged town hall bosses to do the same over the next two years.

But Bromley Conservatives claim that just £3 billion would come from central government with the shortfall being made up from "draining cash reserves" from local councils.

Neil Reddin, Cabinet Member for Resources at Bromley council, said: "The clear implication is that Gordon Brown plans to cut funding to local government even more than he has already, and expects us to sell council assets to make up the difference.

"There are two major problems with Gordon Brown's approach. First is that you can only sell these assets once, but cuts in our government funding will have to made up for many years into the future. If he expects us to start draining our cash reserves, then that will create more problems as we lose the interest we get on those funds.

"Secondly, we in Bromley have been avoiding selling property while prices are depressed, unless there are exceptional circumstances. Gordon Brown might have been happy to sell our gold reserves at the bottom of the market, but we do not intend to do the same with what are effectively our residents' assets.

"It's Gordon Brown's poor handling of the public finances over the last 12 years that left us so badly prepared for the recession; now he expects residents in financially prudent councils like Bromley to get him out of the hole he's dug for himself."

But Mr Brown, in a speech on the economy at a Building Britain's Future conference in London, claimed the plan was better than cutting front-line services, as proposed by the Conservatives.

He said: "Some people would withdraw the fiscal stimulus now, when the economy is still in difficulty. Some people would stop quantitative easing today, that would imperil the recovery."

But the Local Government Association (LGA) said it is disappointed not to have been consulted over the plans.

Margaret Eaton, chair of the LGA, said the sell-off "could have serious ramifications for the state of (councils') tightly managed budgets".

She added: "Given the current financial climate, this is not a good time to sell. It needs to be local councils working with local people deciding when, or if, there is a right time to sell assets."

Liberal Democrat Treasury spokesman Vince Cable also criticised the plans, adding: "Selling off what is left of the family silver is not going to solve the long-term problem of Britain's structural deficit. Selling them off now, when markets are depressed, is not the most prudent way to go."

As of March last year, local authorities owned £251 billion of assets with £232 billion classed as 'operational' such as council dwellings and land and buildings such as schools and cemeteries and the remaining £19 billion in investments.

Bromley is recorded to have £851 million in operational assests and £76 milion in investments.

A portfolio of potential sales, set to include the Dartford Crossing, Ureno, the Channel Tunnel Crossing. The Tote and the Student Loan Company, is to be published in the coming months.

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