Labour councillors have questioned “risky” proposals for Lichfield District Council to create its own property company.
The plans were confirmed at a recent meeting of the local authority.
But Labour representatives have accused the Conservatives of attempting to push through the plans to hide the fall-out from the failed Friarsgate scheme.
The city centre redevelopment scheme bit the dust after private funding failed to emerge after more than a decade and councillors eventually voted not to spend more than £45million underpinning the project after a series of behind closed door meetings.
However, the project did leave the taxpayer footing a £7million for the doomed scheme.
Cllr Sue Woodward, leader of the Labour opposition group said it was the wrong time to be rushing into a major financial commitment with local elections being less than a year away.
“The proposals to set up a local authority property are being rushed through and I suspect that is, at least in part, an attempt to hide Conservative embarrassment over the failure of their Friarsgate project,” she said.
“They feel that they must be seen to be doing something but this has all been done with great haste and insufficient transparency, either to members or local residents – again.
“The impacts of the Friarsgate collapse have barely been considered, as we see from the loss of the Marks and Spencer food store, so a period of calm reflection would be better. I’m not opposed in principle to this idea but it really does need a lot more consideration and public debate.
“This council only has a few more months to run and I think it’s inappropriate and undemocratic to commit to what will be a new council next May to the financial and other commitments being made.”
A vote on the proposals was missed by a significant number of councillors – and Cllr Diane Evans believes any plan cannot be rushed through without thorough scrutiny by members representing all residents.
“The property market is notoriously risky and I am unhappy with the proposal given Lichfield District Council’s recent track record,” she said.
“I’m not convinced that there is a clear and shared understanding across the council of the implications of setting up a property company.
“We do not know either what the thinking behind it is or where the money is going to be spent.
“A recent briefing session was attended by less than a third of members and, for the final vote, 17 Conservatives were absent either having submitted apologies or having left early.
“The single Lib Dem member didn’t attend. This is totally unacceptable and electors deserve better.”
Lichfield Labour councillor Colin Ball, who is on the working group set up to decide what happens next on Friarsgate, said the Conservatives were once again ignoring the warning signs.
“I was dumbfounded that there were no questions raised by any of the Cabinet about this, when it first came forward on 4th September – and it was no better at the full council meeting this week.
“This, in my view, is potentially a very risky venture. I’ve looked at the risk rating and it suggests that this will all be a walk in the park, although everyone knows that commercial property management and building housing for sale is always very risky.”
Councillor Mike Wilcox, leader of Lichfield District Council, said the proposals were part of a strategy to help balance the books.
He said: “Late last year Cabinet and full council approved the council’s Property Investment Strategy, which sets out an ambition to invest in property and introduce a company to develop and manage residential property.
“The approach is set to help address the council’s funding gap, create local jobs and deliver some much needed affordable housing in the district.
“Since the approval of the strategy, officers have spent over six months reviewing options, learning from other councils and working with experts to shape detailed plans. This work and plans were outlined in the recent report to full council and we were delighted the proposals were approved.
“To deliver the plans, we will recruit professionals and introduce new governance arrangements, processes and practices to limit risk and provide ongoing assurance. This includes setting up a council-owned company to develop, sell and or lease residential properties, including some affordable homes.
“The company will be managed by a board of directors, and as the shareholder, the council will retain full control over how it operates, who it works with and what it delivers.
“Far from being unique, this is an approach more than half of councils nationwide have adopted to help balance their budgets in the face of the ongoing reduction and removal of core government funding, and it is something we feel we need to replicate in our own district for the benefit of our local residents and our local economy.
Limit the possible risk
Cllr Wilcox added that the local authority could not afford to stand still until the elections in May.
“Councils regularly make commitments that extend beyond the full term of a council,” he said. “A good example is the Local Plan, which was adopted in 2015 and will last until 2025.
“Our aim is to start relatively small, which will limit the possible risk, and provide time for the new company to mature and grow. It will also mean the council can monitor progress over the coming years and take action to shape and direct its future performance.
“Ultimately this approach could see the council generating up to £2.7million over the coming five years, which will help to safeguard local services and strengthen our local economy and support our communities.”