Somerset Council has lost almost £8 million on the sale of a single commercial property, raising fresh questions about the long-term cost of the authority's commercial property strategy.
The Steelite site in Stoke-on-Trent was purchased by the former Liberal Democrat-run Somerset West and Taunton District Council for around £22.3 million before being sold by Somerset Council for approximately £14.4 million, a loss of almost £8 million.
Questions Over Remaining Debt
At today's meeting of the Somerset Council Executive, the Conservative Opposition sought to establish how much borrowing remains linked to commercial property investments that have already been sold, leaving taxpayers continuing to repay debt on assets the council no longer owns.
Leader of the Conservative Opposition, Cllr Diogo Rodrigues, said:
"Somerset Council is projected to lose around £90 million on its commercial property investments. The Steelite site alone was bought for around £22.3 million and sold for approximately £14.4 million, a loss of almost £8 million.
Based on the council's own figures, that £8 million would have been enough to repair around 65,000 more potholes across Somerset. This administration is selling assets at a loss while keeping much of the debt attached to them. It's the equivalent of selling your house for less than you paid for it, not paying off the mortgage, and still being saddled with the debt.
Residents deserve to know how much borrowing remains outstanding on commercial properties that have already been sold, such as this one, leaving Somerset taxpayers to continue repaying large debts from assets the Council no longer owns."
Executive Response
Councillor Liz Leyshon, Deputy Leader and Lead Member for Finance, said the council had to dispose of assets because of its financial position, arguing that failing to do so could have resulted in the authority effectively facing bankruptcy and a fire sale of assets. She said the disposals had reduced the need for further borrowing. She also referred to confidential council papers, which are available to councillors but not to members of the public, as containing further information on the decisions.
