In a bizarre and desperate move, Northants County Council has announced that they intend to sell their shiny new office known as One Angel Square to a private investor with an agreement for them to rent it back over twenty-five years.
In one way it’s a clever idea and because of the critical nature of their finances I can sort of understand why they have done it. However, it is very much a short-term fix because it will pile extra long-term costs onto the Council. It’s very much only a sticking plaster approach and is unsustainable in the long term.
The building which cost £53 million was paid partly by capital receipts and partly from borrowing. The capital receipts came from selling other council buildings with the staff that had worked in them moving into Angel Square.
The whole idea was the annual cost of the loans would be less than the expensive upkeep of the old County Hall building, although these costs were supposed also to be subsidised by renting out space for retail units but that has never materialised.
One big question has to be how much they will actually get for the building because I have previously been told by senior officers that the commercial value would be far less than the cost of actually building it. This is because of the high specifications that it was built to which far exceed the commercial needs of an office block in Northampton.
Only yesterday I and cross-party colleagues were discussing the budget proposal of renting out one complete floor of Angle Square for just over a million pounds a year privately. This morning, however, we now know that in fact it will be Council that is having to pay rent, presumably at several million pounds a year to the new landlord.
This means that while the Council will get cash injection now to help them over the next year or two, they will still have the long-term costs of making the repayments on the original loans and very expensive rents for many years ahead.
As I say, it’s very much a short-term fix and seems to indicate they are still just hoping to struggle through the next year or two with the assumption that central government will step in to help them out at some stage, a view that was criticised by the recent Local Government Association’s recent review into their finances.
Read about the Local Government Association's review by clicking here.