Commercial Property Purchases
Since 2013, local authorities across the country have spent over £3bn on commercial property purchases – £1.8bn has been spent in the last year. The reason for this is straightforward: desperate to replace the government grants that have been cut almost to nothing, which local authorities used to use to run services, they’ve borrowed money to buy commercial properties in an attempt to keep basic services running.
The way it works is simple. Councils can borrow money at low interest rates from the Public Works Loans Board. They buy freehold properties, usually large ones such as shopping centres, office blocks, or factory estates. These properties are let to occupiers through a full repairing lease. After taking into account the amount the council has to pay back on the loan each year (the PWLB loans are fixed rate, usually over a 40-year period), that leaves a net income, after taking into account loan repayments and any other management costs, of around 2% of the amount borrowed.
Councils can borrow money from the PWLB easily – they don’t have to justify why they want the money, they just have to agree the repayment terms. The only thing they do have to do is agree at their full council meeting how much they’re going to borrow during the course of the year, although this borrowing limit can be varied at any time.
For councils short of money (and almost all of them are), this is a very quick and easy way to generate income. And it has advantages for the local economy. Generally, councils are buying these properties from offshore companies and insurance funds that have no interest at all in the local economy. Having major commercial assets owned by the council lends stability to the local economy by ensuring a safe freeholder who makes sure the properties are properly maintained and isn’t going to disappear overnight, as some offshore companies do.
But there are risks with any property investment. The companies occupying the buildings may fail, which could lead to vacancy periods with no rent coming in. But under the current circumstances, councils have been prepared to take that risk, because they have no other option.
Hastings Council embarked on a programme of commercial property purchases for income generation a couple of years ago. We adopted a strategy for doing this, involving an objective ‘risk scoring’ process, getting an external expert assessment done on the value for money of each purchase, and determining an annual borrowing target for property purchases.
The council has, since it adopted this pro-active approach to property purchase, raised an additional income of £774,000 a year to pay for local services. So far, we’ve only bought properties in Hastings, but we may need to look outside the borough in the future.
But councils in general, and Hastings Council in particular, are not newcomers to the commercial property business. Hastings Council owns over £120m in commercial properties, purchased over many years. In the past, this was done more for reasons of local economic development but has led to a wide range of property assets, from much of Ponswood and Churchfields industrial estates, to the Carlisle pub and the Esso petrol station by Sainsbury’s. Those properties, where the loans are already paid off, bring in around £3.5m to fund council services. These recent purchases add to that property portfolio and top up the income we need to provide local services – the council has many decades of experience at buying (and selling) commercial property.
So we will continue to look for new commercial properties to buy. Without its commercial property income, the council could not function. And as government grants are cut to nothing over the next couple of years, we’re going to need more of them to make the books balance.
Even with the additional income from commercial property, deep cuts to services will still be necessary as government funding to councils collapses. But not earning additional income from commercial property investment would mean making big cuts to even the most basic services, such as support to homeless people, refuse collection, street cleansing, and food premises inspections. And that would be irresponsible in the extreme, when there is an alternative.
The eighth Herring Fair, held on the Stade Open Space on the weekend of 17th – 18th November, proved to be an extremely popular event. Partly because it’s become well-established now, and partly because it was such a wonderful, sunny weekend, the numbers attending were much higher than in previous years. As there’s no admission charge, it’s difficult to estimate numbers, but there were certainly several thousand people attending.
The fair is focussed on herring, obviously, and it’s held this time of year to mark the time when the herring come to our coastal waters. Many fishing towns traditionally held herring fairs for this reason, there was one in Hastings back in the 19th century. In many areas, the herring fisheries have gone, but we still fish them in Hastings, largely because of the sustainable way our fleet fishes. So there were herring for sale, in all their guises: bloaters, kippers, buckling and soused. There were fish cookery lessons to tell you how to prepare and cook herring, and there were plenty of other stalls too, with local beer, cider, wine, bread, and other produce. And there was music, all through the weekend.
So thank you to all those who came along and supported our local fishery. It was a great weekend, much enjoyed by all those there.
I meet regularly with representatives from Hastings Fishermen’s Protection Society, which represents the interests of our local fishery. They’ve expressed their concerns about the tiny share of the national quota allocated to the under ten metre fleet (around 4% for a sector that makes up 95% of the total UK fisheries fleet), making it hard for small boats to survive. And of course, they’re concerned now that they’ve been ‘sold out’ by the government over Brexit, with the promise of UK waters being protected exclusively for UK fishing boats negotiated away in the proposed Brexit deal (although realistically that was always going to happen if they wanted to keep their tariff-free access to the EU fish market; currently 90% of Hastings fish is sold to the EU, mostly France).
In support of our fishery, I recently attended the launch of the ‘Labour Friends of the Fisheries’ group and put the case there for the under ten metre fleet. That wasn’t universally popular, as there were several representatives at the launch of the east coast and Scottish trawler fleets. But I’m very pleased that Labour has now released its new fisheries policy, which says that a Labour government would support environmentally-sustainable fishery practices that protect fish stocks (as our fishery does) and would increase the quota for the under ten metre fleet.
The amount by which the quota will be increased is still being worked out, because it’s complicated, covering different species, different fishery areas, and the impact of other fishery policies (such as the ‘landing obligation’ where boats are no longer allowed to discard fish that they don’t have quota for). But it’s a step in the right direction, which was welcomed by our local fishery representatives when I spoke to them.
County Park Visitor Centre
After years of persistence, the December Hastings Council cabinet meeting finally agreed a contract to build the new Country Park Visitor Centre. This has been a long and complicated process, largely because we wanted to build It using an environmentally-friendly straw bale construction method. To that end, we managed to get a special EU grant for this purpose (called UPSTRAW!), which meant that although overall construction costs are high (£660,000), the council’s contribution is significantly less than it would cost to build a conventional visitor centre. Indeed, without this UPSTRAW funding, we would not have been able to afford a visitor centre at all.
The main reason that construction costs are high is that there were no conventional building companies who were able to do the straw bale construction. The only builders are small ‘artisan’ builders, none of whom could take on a project as big as this. So we decided to assemble a ‘consortium’ of straw bale builders, outside of our normal procurement processes. This failed too at first, but when we were able to identify a straw bale builder who was sufficiently respected by others in the craft, and with whom enough of them were prepared to work, we were able to put together an achievable project.
The straw bales have already been bought and are in storage in the Country Park. They’re nothing special – pretty ordinary bales of straw. The skill comes in how they’re put together, to achieve a building constructed entirely of natural materials, with a very low carbon footprint and extremely good insulation properties. Even the sewage treatment will be environmentally-friendly, with a treatment plant that’s not connected to the sewerage system. Construction will begin in the spring.
Our partners in this project, Groundwork (an environmental charity) will be running the centre when it’s finished, on a ten-year full repairing lease, so the council won’t be incurring any running costs for the centre.
When the project is complete, part of the EU grant will be used to put on a local conference on straw bale building, using this project as an illustrative example, to encourage further, similar construction projects. As more straw bale buildings are built, construction costs will come down, as more builders take it seriously and train their workers to do this. But it’s good that Hastings has not only been a pioneer for this, ending up with an innovative new visitor centre, but we’ll also have played our part in promoting a new, greener building technique.
At the December cabinet meeting, the council agreed the appointment of a new refuse collection contractor to replace Kier when their contract expires next June. Under contractual law, the name of the new contractor can’t be revealed at this stage. Even the councillors making the decision, on the confidential part of the agenda, weren’t told the name of the preferred contractor (I don’t know it either!); they were simply identified as ‘contractor A’. We do know, however, that Kier were not bidding for the contract. This will be a joint collection contract with Wealden and Rother councils.
There will be some changes to the contract with the new contractor. Recycling will be simplified, with glass included in the green bins rather than collected separately. There may be some other changes too, which will be negotiated in the run-up to the new contractor taking over in June.
The street cleansing part of the service will, however, be radically different. We’re bringing this part of the service (including removal of flytips and bulky waste collection) back in house, running it directly through a council Direct Service Organisation (DSO). This has been a big project and has involved a lot of work, but I believe it will be worth it. I’d like to have done the same for refuse collection, but the council simply didn’t have the capacity to set up a DSO for both services at the same time.
We decided to bring street cleansing rather than refuse collection in house mainly because of the way services through an external contractor are specified. It’s relatively easy to specify a refuse collection service: the bins need collecting from every home in the borough on a specified schedule, which never varies. For street cleansing, it’s much harder. Demands on the service will vary day-to-day, particularly in a seaside resort, depending on the time of year, the weather, events and festivals, and so on. It’s much easier to run such a service in-house, where the council has complete control over where staff are deployed, how, and when. It also means the DSO can work more closely with the local community, allowing operatives to respond to local residents and work with volunteer litter-picking groups. All in all, I’m confident we’ll get a more responsive, better staffed and equipped service, which will mean cleaner streets.
Like the new refuse collection service, the new DSO will take over next June
A recent report from the Road Safety Foundation, based on an analysis of road statistics, reveals some shocking findings for Hastings. The report classifies all ‘A’ roads and motorways in the UK in five categories, from ‘high risk’ to ‘low risk’.
The A259 through Hastings is in the most dangerous ‘high risk’ category. But all the roads in and out of Hastings are in the second ‘medium high risk’ category: the A21 from Hurst Green to Hastings, the A259 from Hastings to Eastbourne, and the A259 from Hastings to Folkstone, so throughout Hastings and on all the main routes coming into the borough. But worst of all, the stretch of the A21 through Hastings (from The Ridge to the seafront) is the fourth most dangerous stretch of road in the country, with 17 fatalities during the period 2014- 16.
The responsibility for these roads varies. Within Hastings, they’re the responsibility of East Sussex County Council. But outside the Hastings boundary, they’re the direct responsibility of the government. The county council’s ‘core budget’ isn’t likely to allow much for road safety improvements, because of government cuts to council funding.
For years, we’ve known that the appalling transport infrastructure in this area has hampered economic development and prevented the growth of decent jobs in the area. Now we know it’s also responsible for killing and injuring a disproportionately high number of local people. Yet there are no significant improvements planned for any of these stretches of road.
Marshlink and HS1 to Hastings
I went to a meeting of the Marshlink Action Group a couple of days ago, held in Rye Town Hall.
There was quite a bit of anger directed at Southern Rail, who did a presentation around poor reliability and timetable changes, as well as poor integration with other rail company services. The trains on the Ashford – Brighton service are ‘nearing middle age’ it seems, and power pack (ie the diesel motor) failures are becoming increasingly common. They have to go all the way to Selhurst to be serviced or repaired, and there isn’t a spare train. They will be getting a major refit soon though, they said.
Roger Blake from Rail Futures was one of the guest speakers too – he’s a respected independent rail analyst. He was pretty scathing about proposals to bring HS1 Javelin trains to Hastings, in terms of the credibility and business case. He said that it would cost £200m to do the necessary changes to Ashford International, and the upgrades that would be needed to the Marshlink line (that doesn’t include electrification, which has been abandoned as too expensive and impractical). He thought the public had been misled – there was no funding for the project, and it wasn’t in Network Rail’s programme. If it happened at all, it would be ‘many, many, many years away’, he said.
Keith Glazier (leader of East Sussex County Council) also spoke at the meeting, saying that the junction, signalling and platform changes at Ashford necessary to join the Marshlink track to the HS1 track were going to take place in 2020, but I’ve heard elsewhere that because of new technical problems this is now unlikely.
The HS1 to Hastings and Eastbourne was never popular with everyone (particularly in Rye), but it has been something that has been consistently promised to Hastings as a way to boost the local economy. That promise, it seems, has not been kept.
Overall, the services between Ashford and Brighton are awful, with old, unreliable trains and messy connections with other train companies. The private train operators don’t work with each other and the rail network is chaotic, with unfulfilled promises of improvements. The east-west route along the south coast from Dover to Southampton is non-existent, a series of short, uncoordinated hops involving four or five changes. There seems to be no national strategic plan for the rail network, nor for the trains that run on it. We need to renationalise it, take back control and sort it out.
Many of you will be familiar with the council’s ‘Grotbusting’ initiative, which has been running for over ten years now. This uses powers the council has under the Town and Country Planning Act 1990 to force owners of dilapidated properties to improve them, by serving a s.215 notice, followed by a prosecution and accumulating fine if the works are not carried out. The required work is limited to improvements to the visual appearance of the property, so cannot be used to make any internal renovations.
This power is not much used by other councils but has been extensively used by Hastings Council – we’ve now successfully ‘Grotbusted’ almost 900 properties. The initiative began on the seafront, targeting the many grotty properties there at the time, but is now used across the town. Recent successes include properties in Bohemia Road, St Helen’s Road, Marine Parade, and Cambridge Road. The picture shows before and after pictures for the property in St Helen’s Road.
There’s no doubt that the Grotbusting scheme has helped to improve the look of the borough significantly – the seafront in particular over the last ten years shows a dramatic improvement in visual appearance, but other parts of town have been improved too, particularly around central St Leonards. Local knowledge of the Grotbusting scheme also means property owners are more likely to keep their properties in good condition. So overall, this is a service we want to keep, and will do all we can to protect it from government cuts.
If you’ve got this far, you’re down to the nerdy end of the report … so this is where I report on the future of ‘Happy Harold’.
Happy Harold is a 1928 open-top trolley bus, based on the Guy BTX6 three axle chassis with both rear axles powered. It’s one of only eight open-top trolley buses ever built in the UK and is the only one left. For younger readers, a trolley bus was an electrically powered bus that got its power from overhead wires, which seems like a really modern idea, but they were all scrapped in the early 1970s, with Bournemouth Corporation the last council to run them (I remember them well as I lived there – big, silent, and comfortable).
It’s not surprising perhaps that not many open-top trolley buses were built. Having the 500-volt cabling completely exposed to passengers on the top deck wasn’t best practice in health and safety terms, even in 1928.
Harold was converted to diesel power when the trolley bus wires were removed in Hastings in 1959. Since then, he’s gone through a couple of diesel engines, neither of which has been all that satisfactory – on a flat road, Harold has a top speed of around 17mph.
Harold is owned by Hastings Council, but maintained by Hastings Trolley Bus Preservation Society, who provide drivers too (it’s a very difficult vehicle to drive), The recently-deceased Ion Castro was a HTPS stalwart who did a lot of the driving, and maintenance work.
However, Harold is now in a sorry state of repair, and needs a lot of work doing, mostly to the bodywork. As it was all coachbuilt (ie built by hand rather than mass produced), repairs are possible, but expensive. The engine could possibly be tuned to give a bit more power, and consequently higher top speed. He also needs some strict safety assessments done, particularly to determine safe loadings on the upper deck.
As a council-owned cultural asset, it’s difficult to place a value on Harold, as no similar vehicle has ever been sold. But there are some very wealthy international bus collectors (you have to be pretty wealthy to collect buses) who would pay upwards of £150,000 at auction, it’s been estimated. That puts it up there with, say, our Turner watercolour, so we do need to look after it – which is difficult to justify at a time when we’re making spending cuts.
For now, we’re finding out just how much the repairs will cost. HTPS have some money set aside, and the council has a small budget too. But in the future, HTPS might need to do a bit of crowdfunding. When that comes along, please give generously to make Harold happy again!
That’ll do for now – if you’d like more information on any of this, e-mail me at: