Sunday Times article today
Slough’s suburban landscape has long made it an easy target. The poet Sir John Betjemancalled for friendly bombs to rain on it, and when Ricky Gervais wanted a humdrum setting for The Office, the Berkshire town offered the perfect backdrop.
The local council, though, has been doing its bit to try to shrug off that dull reputation. Last week, Slough’s Labour council
was taken over by ministers after blowing a £100 million hole in its budget in the wake of a string of commercial property
acquisitions. The council’s spending spree, which catapulted its borrowing to £760 million, took in an Odeon cinema in
Basingstoke and a Waitrose supermarket 80 miles away in Gosport. In the town centre, the council spent £42 million
developing a Thunderbirds themed hotel in partnership with Morgan Sindall.
“They have been spending like the Kardashians and these property deals are not a healthy way of spending residents’
money,” said 59-year-old local resident Sharon O’Reilly. “This is not a joke — we have a homelessness problem and the
food bank is running at overcapacity. This will really affect people.”
Disgruntled locals wrote a protest song last summer with the chorus:
They spent all our money, Rishi
What ya gonna do?
Send them to the dungeons
That’s what they used to do
In fairness, Slough is not the only one. In the past six years, local authorities have splurged £6.8 billion on commercial
property, according to the estate agency Savills. While some of those deals were motivated by a desire to take greater control of local regeneration projects, others were a desperate attempt at generating income to offset a 38 per cent real-terms cut in central government funding over the previous decade.
Twenty-four local authorities now have commercial property portfolios worth more than double their annual budgets. And a Sunday Times analysis of their accounts reveals that the cumulative value of those property portfolios has tumbled by £202 million in the past three years, leaving local residents to foot the bill for poor investment decisions. “It was a disaster waiting to happen and everyone knew it. How can local councils compete with savvy, seasoned investors out there in the marketplace?” asked real estate tycoon Nick Leslau, owner of Alton Towers and the Manchester Arena. “We didn’t do this, but, candidly, there has been a period of time where investors could sell problem properties for top dollar to local authorities.”
Slough council is now selling half its £1.2 billion of assets. Councillor James Swindlehurst said the local authority’s property portfolio had provided more than £5 million of income a year, helping to fund frontline services that would otherwise have been cut. He acknowledged, though, that managing the portfolio had been a challenge. Slough council followed in the footsteps of Croydon by, in effect, declaring itself bankrupt. In 2018 Croydon’s then Labour council leader Tony Newman
sanctioned the £53 million acquisition of a local retail park and a £30 million deal for Croydon Park hotel, which went bust
last year. Auditors from Grant Thornton said the council lacked understanding of the retail and leisure markets and that its
strategy of investing its way out of financial trouble was “inherently flawed”.