Yesterday, Shropshire Council agreed in private session to buy the Darwin, Pride Hill and Riverside shopping centres. BBC Radio Shropshire is suggesting that the purchase price is £60 million. The day before, the cabinet agreed to spend £300,000 on consultancy fees to examine refurbishing Shirehall at the cost of more than £18 million. If the government approves the North West Relief Road around Shrewsbury, the council will chip in £21 million and pay for any overspend. In the same breath, it is aiming to raise £1.2 million a year by imposing contributions to council tax on some of the poorest in our county.
This cruel imbalance in spending and taxation partly arises from political ambitions and dogma. It also arises from spending cuts and the obscurity of local government accounting rules that prevent us spending capital receipts on services.
It is a golden rule of local government that money gained from selling capital assets, that’s everything from closed schools to redundant offices (think Stone House), must be used for capital purposes. It can’t be used for services. Capital resources can only be spent on capital expenditure. Local authorities can transfer money earmarked for revenue into their capital account. That hasn’t happened for years as councils across the country are fighting deficits and don’t have any spare cash. The vital point here is that local councils are blocked from transfer money from their capital reserves to pay for services without permission from central government.
I wish these rules weren’t in place. While they are, we need to think about how we use the millions that Shropshire Council has banked in capital receipts. I don’t have an exact figure to hand but more than £100 million is languishing in bank accounts and loans to other bodies that are earning well under than the rate of inflation. It is right that we use this money in a more effective way to earn income
So, let’s get out of the financial quagmire and talk about real buildings.
Shropshire Council is thinking of buying the Pride Hill and Darwin shopping centres in Shrewsbury, and buying out the lease for Riverside. The new Primark has boosted Darwin and I hear of plans to move other stores in. Riverside is an embarrassment to Shrewsbury and I’m not sure what purpose Pride Hill shopping precinct serves.
Yesterday, the council agreed to proceed with the purchase of all three shopping centres. The BBC is suggesting that the cost is £60 million. I can’t comment on whether that is accurate as the discussion at council yesterday was held in private session. There were some good arguments for and against at yesterday’s meeting but the lengthy debate was in camera so it can’t be reported.
I am not convinced about this scheme. Something needs to be done to improve the centre of Shrewsbury. Shropshire Council has approved a lot of out of town retail areas, saying they will not damage the town centre. But there seems little doubt that they were one factor in the decision of the owners and leaseholders of the shopping centres to do little with them, especially Riverside. Just along the A5, Southwater in Telford is booming. But, overall, the high street retail market is weakening.
A shopping centre would not be my first choice for investment. We have a very uncertain retail environment. The economy is only just above zero growth and it’s a gamble whether Brexit will weaken it further or boost it. People need money in their pockets to keep high streets going. At the same time, the high street becoming more of a social destination than a place to buy goods. Purchases now happen in the biggest retail centres and, more and more, online.
A second proposal makes more sense to me. Shropshire Council has neglected Shirehall, initially in the belief that it wouldn’t be needed after funding cuts and could be sold for housing. Now it realises that it must have office space and much of the current building is now barely fit for purpose. It could also share space with other organisations and make money on rent. The costs are, as always, eyewatering. Nearly £19 million on the preferred option. But the hoped for return on the investment would be nearly 16%, meaning the capital investment would be repaid over 13 years. I have no idea whether that rate of return is realistic.
There are other ideas for this building. Speaking to Ludlow Town Council on 30 October, Shropshire Council leader Peter Nutting said:
Another controversial problem was the Shirehall building, which was over 50 years old and estimates had shown would cost £50 million for refurbishments and maintenance. It was inevitable that investment would be required to make it more customer friendly. To one side of Shirehall was a building, used by the court services, which would be vacated shortly, and his vision would be to see an M&S Food Hall or Waitrose in this space. The ground floor of Shirehall was light and airy, with glass walls, which he envisaged as a restaurant, Gregg’s Bakery and perhaps a Costa Coffee outlet.
I have no idea how this squares with the refurbishment plans or the plans by the crown court to relocate to the vacant magistrates court.
At yesterday’s Shropshire Council meeting, a motion by Councillor Heather Kidd to get planning rules changed to allow more affordable rural housing and examine the case for building more council housing was kicked into touch. The issue will go to a scrutiny committee. It seems odd that decisions can commit to buying shopping centres without going to scrutiny but building vitally needed affordable housing in rural areas is not a decision to be rushed.
It absolutely grates with me that the council is to splash out maybe £100 million on capital projects when it says it is so broke it must raise £1.2 million from the poor. As I said at the beginning of this article, that’s happening because of a mixture of accounting rules, government cuts and political dogma.
. The way local councils can spend money is defined in the Local Government Act 2003 and regulations set by central government. Until March 2019, new capital receipts can be used for reform of local government services under a limited waiver of the rules.
. Councillors were only allowed access to the paperwork for the debate on purchasing the shopping centres through a secure online server. Technical problems meant that many could not access this. Printed copies were provided, individually numbered with instructions to hand them back at the end of the meeting.
. According to the Local Data Company, the retail unit vacancy rate in the West Midlands was 14.2% in the first half of this year. Although there was some improvement nationally in occupancy rates in the last quarter of last year and the first quarter of this, the second quarter of 2017 saw an increase in vacancy rates.
. Ludlow Town Council minutes, 30 October 2017.