Torbay Council is set to review disposing of some of its assets, worth around £175m, as it looks to balance its budget amid period of “financial uncertainty”.
According to the authority’s latest proposals, Torbay has a 2024/25 revenue budget of almost £139m but will only receive £8.2m from the government through the Revenue Support Grant. This is despite the funding being increased in line with inflation as set out in the provisional local government settlement for the next financial year.
The proposals outlined that as a result of this, the majority of Torbay’s funding comes from council tax and business rates, but with high levels of inflation and “continued financial uncertainty”, the authority must look for extra income or cost savings.
Under new proposals to generate additional income, the council suggested reviewing its assets to potentially dispose of some considered “high value”. Torbay Council’s assets are currently valued at around £175m.
A report published alongside the budget proposals outlined that the disposal of assets could free up “funding to facilitate council borrowing for Torbay regeneration and local capital investment”.
Torbay Council currently has a four-year c£270m capital investment programme, which was approved in March 2023. In addition, as of 30 November 2023, the authority held £364m of borrowing.
Loosening capital receipts rules
Under the current rules, councils can use the proceeds of asset sales (capital receipts) to fund other capital expenditure or pay off debt.
However, before Christmas, the government published a “call for views” on potential flexibilities for local authorities to use capital receipts to help meet general budget pressures.
The engagement with councils outlined three new options: to provide greater flexibilities on the use of capital receipts, including the scope to meet general budget pressures; to increase flexibility to use capital receipts and borrowing to finance the costs of transformation and efficiency projects; and potential additional flexibilities where the proceeds relate to the sale of investment properties.
The new proposals come as local authorities in England are struggling to balance their budgets as they face a cumulative funding gap over the next two years of around £4bn. In addition, almost one in five council leaders and chief executives have warned that they could be forced to issue a section 114 notice either this year or next year.
However, in contrast to these proposals, UK Treasury minister Laura Trott cautioned against councils selling their assets in an interview with Times Radio on Sunday (7 January).
“I wouldn’t support any selling off of community assets.
“If you’re looking at their capital footprint and how they are using their capital footprint and whether they could be more efficient, that is something that absolutely we’re trying to get councils to do,” Trott said.
The government is inviting local authorities, sector representatives and other stakeholders to provide their views on these proposed options until 31 January 2024.
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