LibDem Sutton ‘invests’ £30m in Oxford charity offices

Sutton Council, which has hardly covered itself in glory recently over its involvement with charities, has just forked out £30 million to buy the offices of Oxfam in Oxford, and among the first things it has decided to do as the global relief charity’s new landlord is plan to increase their rent.

oxfamThe decision to go into the property speculation business was announced in a council report at the end of last week – only after the contracts had already been exchanged.

Agreed by Ruth Dombey, the leader of the LibDem-controlled council and her deputy, Simon Wales, the matter was never discussed or subjected to scrutiny at council meetings. The decision was taken under “urgency procedure provisions by a council officer”.

The report confirming the done-deal was slipped out quietly at 4.50pm last Friday, presumably in the news-management mode of hoping no one would notice. Opposition councillors in Sutton have complained that they were not even paid the courtesy of being sent a press release about the multi-million-pound deal, never mind being offered the democratic opportunity to debate its wisdom, or the lack of it.

“The council has a policy of ‘Opportunity Sutton’, where they are supposed to do their utmost to support and encourage businesses in Sutton,” one angry councillor said.

“This is more like ‘Opportunity Oxford’. Why are they investing such a huge amount outside the borough that they are supposed to be running?”

Sutton Council has taken out a long-term loan in order to make the property “investment”. The council report states: “The investment decision assumes that the purchase price will be funded by prudential borrowing.” Like they are ever going to report that they are using imprudent borrowing…

“The interest rate used for this is the current rate for a 50-year PWLB [Public Works Loan Board] annuity loan which is 2.83 per cent.

Sutton council leader Ruth Dombey: has a bit of a crisis on her hands over the incinerator

Sutton council leader Ruth Dombey: looking to profit from a charity

“This purchase will provide an annual rent payment to the council of £1.69million. The net surplus after costs is £484,000 per year for the first four years and with potential further growth at rent reviews/lease renewals or new lettings over the 50-year financing period.”

Elsewhere in the report, it states: “There is provision for rent reviews every five years so there is potential for rental growth.” In plain English, that means they will increase the rent.

“The passing rental is based on £19.40 sq ft with evidence of headline rentals from other offices nearby of £25 per sq ft. The property consequently has the potential to perform well in the future.”

The building, which has cost £29,890,000, is on Oxford Business Park, and has been Oxfam’s headquarters in the UK since in 2005. They have rented it from a pension fund manager, who has now sold it to Sutton.

This property deal follows the costly aborted attempt by Sutton Council to buy a shopping centre in Reading earlier this year. Although it was publicly reported that that property’s owners were subject to a fraud investigation, Sutton Council’s officers did not discover this slight impediment to a business deal until they had spent £35,000 of public money on legal fees.

Oxfam is among the world’s biggest aid relief charities – but every pound extra it will have to pay in office rent to Sutton will be £1 less that it has for providing relief to people in famines and war zones.

Sutton’s LibDems’ relationships with charities closer to home have also drawn criticism and been subject to criminal prosecutions.

Holy Trinity Church, a frequent meeting place for Sutton LibDems, received £275,000 towards rebuilding work from a charity connected to incinerator operator Viridor, coincidentally around the time that senior Sutton LibDems were deciding on planning permission for Viridor to build an incinerator at Beddington Lane.

And earlier this year, Alan Salter resigned as a LibDem councillor when he came under police investigation for defrauding thousands of pounds from a Sutton charity for the elderly. Salter has since been found guilty and is awaiting sentencing, with the Charity Commission having investigated the affair and determining that Sutton LibDems exerted influence which may have delayed the proper and prompt reporting of the thefts.


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2 Responses to LibDem Sutton ‘invests’ £30m in Oxford charity offices

  1. It concerns me (on behalf of residents) when local authorities directly invest in real estate and other specialist areas because they rarely have the relevant expertise to make an informed decision.If this was such a good deal wre there other bidders? Why was the Pension Fund manager selling? I suspect they know more about the value than Sutton. With a 50 year financing period I’d be interested in the risk of losing tenants and difficulties in letting as the building ages.

    The bottom line is that an Officer has made the commitment of £30 million, not with his/her money but public money. Can this be proper?

    Liked by 1 person

  2. Bee Kay says:

    What about investing in local properties and renting to local families?

    Like

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