Council's £30m car park sell-off plans agreed – despite critics warning of 'daft' and 'ridiculous' scheme

The motion outlining the plans, from Shropshire Council's Conservative administration, was approved following a recorded vote earlier today.

Gwilym Butler, Shropshire Council’s cabinet member for finance, said the scheme was about ensuring the financial stability of the beleaguered authority – and retaining control of its assets.

He said: "I believe this represents a significant opportunity for both the fiscal health of our organisation and the long term protection of assets in our community."

He added: "With this proposal we can seek the opportunity to leverage our assets in a way that is forward thinking and sound."

The plan has been drawn up after the council revealed it is £32.7m short on its bid to make £49.8m of capital receipts this financial year.

Under the proposal the council will sell around ten of its car parks to investors, for around £30m up-front.

The new owners will then lease the car parks back to the authority for around £1.5m a year – although those figures are subject to change.

The council will retain the money made from car parking – although it will be used to pay the yearly charge.

The arrangement, known as an 'income strip', would see the investors buying the car parks for 125 years, with the council able to buy them back for a 'nominal fee' at the end of the arrangement.

The plans were met with significant criticism from opposition councillors, who warned the authority would be left with no assets to show for huge amounts paid out over the course of the contract.

Others described it as 'desperate' and said it made no sense to enter into a complicated financial arrangement just to finance redundancies of more staff.

One councillor said the intricate nature of the arrangements required more time to consider – and the proposal was being unacceptably rushed.

Liberal Democrat opposition joint leader, Councillor Roger Evans warned the authority would have nothing to show for the money spent on the deal..

He said: "To do what is proposed will in effect place a yearly charge that the council will have to pay for 125 years, 50 years, who knows.

"What will we have to show for this? What will we have paid for, how well have we spent the inheritance – the answer is nothing. No buildings, no assets, no assets which will increase in value."

Councillor Evans added that the if the inflation on the payments hits four per cent then the council will be in "negative territory" within just seven years.

He said: "The alternative of four per cent, and in today's climate that is a more realistic figure, unless the council decided to increase charges, increase income, then we will enter negative territory in just seven years. The payments due will be above the income generated by the car parking."

Labour Councillor, Kevin Pardy, questioned whether members understood the detail of the plans – and said officers should have briefed all councillors to fully explain the scheme.

He said: "When it comes to finance at this level I am not good. I don't understand it and I believe there will be other people voting today that don't understand it – I am not being rude, sorry.

"To present this to me just a few days before voting on it is wrong."

Meanwhile Copthorne Liberal Democrat Councillor Rob Wilson said the arrangements would be storing up problems for future councillors – and council tax payers.

He said: "Back a few years ago this council used a large chunk of capital to buy a big piece of land in Shrewsbury's town centre to have control of that land.

"Now it says it has a capital problem but it also has a revenue problem. So because of the revenue problem a lot of people are taking redundancy, that means there is now a capital problem in order to pay them off, but to sort the capital problem what we are going to do is give up control of some land and create a future revenue cost on every council for the next – somewhere between 30 and 125 years and that is my understanding of it.

"I agree with Kevin, this is a very complicated financial instrument. I think generally when you don't understand things like this, when you look and them and go and read about them, there is something not right.

"I think this has a future issue all over it – that we will be coming back to in five years, ten years, and they will be going 'what were they doing when they did this? Did they really understand it?'."

Meanwhile, Ludlow's Lib Dem Councillor Viv Parry said: "I think this is a daft idea, completely daft. My father said when I was a little 'never sell things off when you need money'."

She added: "Please don't do it, it is a ridiculous."

Responding to the critics Councillor Butler asked his political opponents to come up with a better solution.

He said: "I have got to take £27m off the revenue budget for the staff this year and I have to find it from somewhere so if it's not coming from here the other side of the chamber can tell me where it is coming from."

The plan was passed with 44 votes for the paper, 16 against, and two abstentions.