Agenda item

Attending for this item were the Cabinet Member with Responsibility for Transformation and Commissioning, the Interim Director of Commercial and Change, the Managing Director and the Land Agent from the Place Partnership Limited.

At its meeting on 28 September 2016, the Panel received an update on the Property Asset Strategy. Following this update, the Panel identified that it would like to consider the Smallholding Strategy and also how the County Council's relationship with the Place Partnership Limited (PPL) was developing.

Smallholdings Strategy

During the introduction of the Smallholdings Strategy, the Panel were advised that a map was available for members to look at showing the location of the smallholdings in Worcestershire. The main points highlighted in the discussion were:

·       The Smallholdings Estate was predominantly purchased in the early 20th Century as part of a national policy to provide farming opportunities for new entrants, with the initiative predominantly taking off after the First World War, due to concerns over food security and a desire to provide a livelihood for returning soldiers. Some 10 years ago the Estate was 4255 acres, which included 247 acres of leased land, where the County Council was the tenant and then let the 247 acres on to farm tenants.  Since then, the 247 acres of leased land had been surrendered and some 960 acres of the Estate sold, generally to long standing tenants.

·       The County's average smallholding size was 37 acres, compared to the national average of 83 acres (as at March 2015). Gloucestershire County Council had an average of 64 acres and Warwickshire County Council's average was 101 acres. 71% of the County's holdings were less than 50 acres and with further increases in regulations and reduced opportunities to sell directly to the consumer, the more challenging the viability of these smaller holdings was becoming.

·       A fundamental principle of owning a Smallholdings Estate was to provide a tenant with the opportunity to progress from a starter unit to larger units. If the Council was to develop the Smallholding Estate, it would need to undergo significant changes, as opposed to its current more flexible and pragmatic approach of taking opportunities when they arose.

·       As of today, the County Council's Estate was approximately 3,048 acres (1,233 hectares) spread between 30 parishes within the County. This was an 8.7% reduction since June 2015, when the management goals of the Smallholdings Strategy were approved. There were 87 tenants occupying the Estate which ranged from bare land holdings of a couple of acres to fully equipped holdings.

·       The disposal strategy under the Better Use of Property Programme included disposals which maximised the approved management goals of the Smallholdings Estate and by the end of this Strategy up to 2020 the Smallholdings Estate would be reduced by a further 6.1%. 

·       The gross rental income of the current let Estate was about £287,829 with a capital value subject to the existing tenancies of approximately £34million. This gave a return on investment of about 0.85%, which was lower when taking into account Landlord repairs and maintenance, staff management costs and insurance etc.

·       The Property Asset Strategy approved by Cabinet in March 2016 re-affirmed the 2015 revised set of management goals for the Smallholdings Estate and the basis of the current management and end of tenancy action plan. These management goals were to:

Ø   manage the Estate to produce an ongoing revenue surplus either through direct rental income or by using alternative revenue streams from non-agricultural use.

Ø   strategically improve the Estate by re-letting farms where appropriate, amalgamating farms to create more viable units and releasing surplus dwellings and buildings for sale.

Ø   pursue the maximisation of the Estate’s value by seeking opportunities for residential and commercial development through the local planning process.

Ø   use the Estate to support the County Council's wider environmental and sustainability objectives by appropriate land management measures

Ø   explore the options for a solar farm and opportunities for sand and gravel extraction on smallholdings land.

During the opportunity for questions, the following main points were made:

·       The houses, which were part of the Smallholdings Estate didn’t have any agricultural occupancy conditions.  If sold at any point, they would be sold at market value.

·       Due to the fact most of the tenancies were lifetime tenancies, a number of the holdings had ageing tenants.

·       It was confirmed that the current Strategy did not include an intention to further increase the Smallholdings Estate or plans for a mass sell-off.

·       In response to the concern about how low the yield was at 0.85%, the Panel were advised that agricultural land was bought for capital appreciation not on yield.

·       It was suggested that the Management Goals were contradictory - on the one hand, the disposal strategy under the Better Use of Property programme included disposals which maximised the approved management goals of the Smallholdings Estate and by the end of this strategy up to 2020 the Smallholdings Estate would be reduced by a further 6.1% and on the other hand, opportunities were being explored for solar farm and sand and gravel extraction on smallholdings land.

·       Each holding in Worcestershire was approximately 37 acres and had an individual Strategy. In order to be profitable, holdings should be a minimum of 100 acres for agriculture and 10 acres for horticulture.

·       One of the Members of the Panel would be supportive of the County Council investing in Smallholdings to support the agricultural community and give young farmers development opportunities.  It was suggested that a Scrutiny to re-consider the purpose of smallholdings should be added to the Scrutiny Work Programme.

·       Investment in solar panels was not part of the overall strategy.

Following the discussion, it was agreed that:

·       The Panel would be sent a summary of the types of smallholdings and the Strategy in place for each location.

·       A Scrutiny of Smallholdings, revisiting the purpose of smallholdings should be added to the Scrutiny Work Programme.

·       The goals of the Smallholdings Portfolio as agreed in June 2015 would be sent to the Panel.

·       Any comments or suggestions in respect of smallholdings would be sent to the Cabinet Member with Responsibility for Transformation and Commissioning.

The Place Partnership Limited

The Panel received a presentation, copies of which were circulated at the meeting.  During the presentation, the following points were made:

·       The proposal for Place Partnership Limited (PPL) was approved by Cabinet in 2014.

·       PPL was the first multi-agency joint property vehicle of its kind. It was a private company wholly owned by a number of public sector bodies, delivering innovative property services.

·       The six shareholders were Worcester City Council, Hereford and Worcester Fire & Rescue Service, Worcestershire County Council, West Mercia Police, Redditch Borough Council and Warwickshire Police, each with equal shares.

·       The County Council were a customer, shareholder and board member.

·       The relationship with partners was maturing and in 'transition'.

·       The key achievements of PPL to date were:

Ø £1m savings to partners in 2015/16

Ø £477k County arrears recovered. Commercial arrears now only £48k.

Ø £43,000 rates rebate in respect of the Hive based on a successful appeal against Rateable Value.

Ø Detailed asset management report on the farms estate

Ø Significant One Public Estate successes

Ø Pioneering Place Review work in Redditch

Ø Meaningful new business wins

During the discussion, the following main points were made:

·       It was confirmed that the role of PPL was to advise and act on behalf of customers. Ultimately, decisions were made by the customer.

·       Members were pleased to note that £477k arrears had been recovered and only £48k of commercial arrears remained.

·       Members reiterated the importance of working with councillors and communities in order to achieve the best possible outcomes.

·       It was agreed that all councillors would be sent an up to date contact list for property matters.

·       The six Shareholders had 2 seats each (one executive and one non-executive).

·       PPL also carried out work on behalf of customers who were not shareholders.

·       The main challenges moving forward were to ensure the greatest benefits from one common estate philosophy were achieved and the 'right' staff were developed and retained.

The Chairman thanked everyone for attending the meeting.