Agenda item

1. The item was introduced by the Deputy Leader, Brian Collins, who provided a contextual overview of the statutory obligations of the Local Government Act 1970 and the Asset Disposal Strategy’s importance in KCC’s financial stability.

2. Rebecca Anderson, Head of Business Information and Assurance, introduced the report that outlined the statutory and fiduciary framework for disposing of KCC surplus freehold assets to generate capital receipts.

3. In response to comments and questions from Members, the discussion covered the following:

• When determining the outcome for surplus assets, considerations were made for the property’s holding costs, the strategic position of other KCC departments and environmental options. It was explained that the notice period given to other KCC departments on the availability of surplus properties varied depending on the amount of notice the service exiting the asset provided Infrastructure. 
• Mark Cheverton, Head of Real Estates, outlined the process of delegation to the Director of Infrastructure for any leases under 20 years, and clarified that an options appraisals included a viable leasing option before an asset was declared surplus.
• The decision on whether to rent rather than sell an asset had no defined benchmark but instead depended on several factors including the market sector, value and potential risks. 
• In response to a request on further information on the 77 assets in the pipeline for disposal, commercial sensitivity was emphasised by Mr Cheverton. 
• As KCC was bound by Section 123 of the Local Government Act to dispose of any asset it declared surplus; any potential changes due to LGR could not override this statutory duty until a formal LGR decision was announced.  
• Mr Shipton explained the limited circumstances in which KCC could use capital receipts for revenue purposes, detailed in an appendix to the annual budget report.

• Mr Cheverton provided an overview on how KCC’s property acquisition and disposal teams collaborated to ensure held surplus assets were discounted from reuse before acquisitions were considered. 
• Mr Collins explained that the increase in the number of properties in the disposal pipeline did not indicate a change in policy, due to the proportion of assets that would not mature to disposal. Recent changes were also outlined to explain higher numbers of properties in the pipeline for disposal including an increased number of surplus children’s centres following decisions for service changes.  
• Community Interest Groups may nominate a local property as an Asset of Community Value which ensured the community is given 6 months to prepare a bid for the property if it comes forward for disposal. It was emphasised that in line with KCC’s Disposal Policy, groups could include a business case on its benefit value for KCC’s wider services.
• In response to a request for the annual cost to the Council of maintaining and securing unused assets, Mr Collins confirmed that the figure could be provided outside of the Committee meeting. 
• Where there were assets with De Minimis value, an external valuer would undergo an assessment before the transfer occurred to safeguard against an asset being sold significantly below market value.
• The statutory obligation to dispose of a surplus asset applied to both leasing and freehold agreements but did not preclude KCC from leasing the surplus asset externally. The Committee was assured that assets were optimised and all options explored before the disposal process to ensure best value.
• The warm, safe and dry policy was the basic condition for occupancy with a minimum requirement of safe for vacant properties.

4. Following the questions, the Chairman welcomed comments and views from the Committee about the report. These included:

• A Member raised concerns on if work would be done to give local authorities first option of development on their land.
• It was posed that the Cabinet Member adopt a flexible attitude towards an asset’s market value if the community organisations that presented the bid were willing to additionally supplement KCC funded services.
• A Member raised concerns over transparency and requested that greater focus be given on the relationship between assets purchased and assets sold, including the viability of the timeframes.
• A request was made for more detailed documentation to be provided, including on the relationship between service building providers and community interest parties, as well as business cases to be appended onto Policy and Resources (P&R) Cabinet Committee reports.
• An emphasis was placed on the strategic impact of the disposals policy, including the transformation of assets that yield financial returns for KCC offsetting some disposals costs.
• The Chairman commented on interest in the interpretation of policy in relation to Local Government Reorganisation (LGR) but the committee acknowledged the levels of uncertainty currently surrounding LGR. 

·         A Member posed a series of recommendations including a focus on transparency of public information. This was to ensure that all information suitable for the public domain was published and not withheld under exempt papers.

·         There was also a request to review the timeframe for asset sales versus purchases and to assess whether assets scheduled for disposal could instead be repurposed for service delivery, reducing the need for 'new purchases'. Alongside this, the Member suggested to implement horizon scanning to maximise asset value and usage.

·         Furthermore, A recommendation was raised to require publication of communication between departments concerning asset disposals, operation proposals and businesses cases submitted by directors. This included cases where assets marked for disposal might have been requested for service delivery. These recommendations were not agreed by the Committee.

5. The Chairman called on the Cabinet Member to provide comments and clarifications on the Member’s points of debates:

• Mr Collins emphasised the detailed reports on disposals provided at the P&R Cabinet Committee and questioned the necessity of additional documentation, considering the possibility of diverting officers attention away from their core responsibilities.

6. The Chairman proposed to note the report and request the Policy and Resources Cabinet Committee to note the discussion of the Scrutiny Committee. This was agreed by the Committee.

RESOLVED to note the report and request the Policy and Resources Cabinet Committee to note the discussion of the Scrutiny Committee.