Elliott Keck is the Head of Campaigns for the Taxpayers’ Alliance.
Sometimes I get tired of making the argument that what local authorities need to do is get back to basics, ditch the gimmicks and pet projects and focus on what matters: delivering high-quality public services at low cost. Particularly when the number of councils in serious financial difficulties only grows. Is it really a time for soundbites?
Then a news story comes along which reminds me that far from being a soundbite, this remains a central cause of the financial woes of many councils. Let’s head north to Bradford. In March the council passed a “devastating” budget including £40 million of cuts, with the local authority only just avoiding bankruptcy after £220 million of emergency cash was injected into the town hall coffers by central government. It was with a “heavy heart” that the leader of the council announced the closure of children’s centres and waste recycling tips to help make up the shortfall.
Yet somehow, despite this, the council has found the cash to spend tens of millions of pounds on a project to make the city the UK’s city of culture for 2025. Part of this project includes a £50 million redevelopment of the former Odeon cinema, of which the council is putting up £44 million. What’s the status of this grand project? Well the NEC group, which was supposed to run it, has pulled out, meaning the venue sits empty. This makes a mockery of the taxpayers nationwide who bailed out this rotten borough.
Bradford Live, as it’s known, has good company when it comes to empty council buildings. Research we’ve released by the TaxPayers’ Alliance has found that over a two year period, from January 2022 to December 2023, there were at least 4,908 council-owned non-residential buildings that spent time empty. The cost of insuring, securing, maintaining and renovating these properties during this time was over £88 million. Of the 3,408 properties for which we have size data, these empty properties add up to over 8.3 million square metres, or nearly three times the size of the City of London.
Particularly worrying is the fact that the number has grown. We conducted this research a few years ago, looking at the two years covering January 2016 to December 2017. Looking at the 172 councils that provided data on both occasions, the number of empty properties grew from 3,206 to 3,564.
What’s behind this increase? The pandemic won’t have helped. While the work from home trend doesn’t look as permanent as it appeared a couple of years ago, there’s no doubt that working practices have changed, with office space less crucial than it used to be. Which is precisely the problem. In 2020 the National Audit Office warned that many loans taken out by town halls to invest in commercial property were not price in accordance with risk, meaning that many may have paid a premium above the market rate to acquire commercial property .These loans were provided by the Public Works Loans Board, at a discounted rate at taxpayers’ expense. This has since been curtailed, but not before vast numbers of properties were hoovered up by local authorities.
Local authorities made these investments, using unusually cheap loans, in the hope that they would provide reliable sources of income. This is now looking like a bad bet. And the results are clear: of 172 councils that provided data for both 2016-17 and 2022-23, the number of empty properties increased from 3,206 to 3,564.
There are a number of councils that are particularly exposed. Sandwell, which is forecasting budgetary black holes of over £20 million in the next five years, had 164 in 2022-23. Portsmouth council saw the biggest increase, with 113 more empty properties in 2022-23 compared to 2016-17; at the same time the council declared a budget overspend of £6.8 million.
South Cambridgeshire council, where staff are working a four-day week in a never-ending trial, spent £14.1 million on a property that spent time unoccupied.
Particularly concerning is Spelthorne, where the council spends three times more on servicing its debt than it does on services in 2022-23. In what sounds like an echo of neighbouring Woking council, it had a debt of £1.1 billion, compared to a spending power of £12.6 million. They had one of the highest spends on empty properties at £4.8 million, and the highest average maintenance cost per empty property at £127,495, almost double Mole Valley in second place. The massive property portfolio it built up from 2016 onwards looks increasingly like a ticking time bomb.
Many councils also saw decreases in the number of empty properties, including Renfrewshire where the number fell by 76. This is reassuring and suggests that there are councils managing their property portfolio sensibly and maturely, selling off properties that they can’t utilise while working ensuring that those they keep on the books are occupied by tenants. But the overall picture is concerning and should be a wake up call for any local authorities hoping to avoid difficult budgeting decisions by seeking the get rich quick scheme of property investment.