£10m asset sales target not achieveable

By Elgan Hearn, Local Democracy Reporting Service

Not selling county farms means that a Powys council £10 million annual asset sales target is “not achievable," a finance chief has said.

Capital receipts were brought up at a meeting of Powys County Council’s Finance Panel on Thursday, November 20, where councillors and independent lay members discussed the Capital Budget update for Quarter Two.

The capital budget funds council building and maintenance work.

Treasury management accountant James Chappelle told the committee that “just under" £800,000 had been received by the council at the end of September from asset sales.

Mr Chappelle said: “There are further sales agreed but we don’t expect to get much more than £2.7 million by the end of the year.

“The moratorium on county farms is in place and is not allowing us to sell some of the surplus assets we have got.”

With 138 holdings and 10,700 acres of land, the Powys farms estate is the largest of its kind in Wales and the fifth largest in the UK.

The council’s farm estate has become a political football over the last couple of years.

In July, opposition councillors joined forces against the minority Liberal Democrat/Labour administration and voted in favour of a motion to scrap the sales target and pause the sale of county farms in Powys.

Cllr Chris Walsh (Labour – Brecon East) believed that a consequence of this “political decision” is that the council will need to borrow more money to fund projects. He asked for more detail on this issue.

Mr Chappelle explained that £3 million more in borrowing is needed to cover the lack of capital receipts and that accrues interest of £55,000 per £1 million. 

Finance Panel chairman Cllr Aled Davies (Conservative – Llanrhaeadr-ym-Mochnant and Llansilin) asked: “Putting aside the county farms estate, what potential for asset disposal is there?”

Mr Chappelle said: “Without the county farms the £10 million target is not achievable.”

He said that a sale of a “reasonable farm or smallholding” could bring in £1 million each to the council.

Mr Chappelle added: “When we’re talking about the sale of an office building or small school, they come with lots of liabilities and risks.”

He believed these sales could make up to £250,000 each.

Cllr Davies asked: “If you strip away the county farms, what would be an appropriate target?”

Mr Chappelle said: “We’re probably talking about £2 million a year – it certainly is no more than that.”

Cllr Davies believed it would be “useful” for the wider council to understand this.

The report and comments from the panel will go before the Cabinet at a meeting next month.