Local authorities across the country are exploring ways to improve their cash position by transferring assets to community-based organisations. Taking this approach, they can retain ownership of them, whilst offloading the costs associated with their upkeep and maintenance. Alongside this, there was clear encouragement (and some potential financial support) in the recent Budget and the associated policy documents for community groups to be involved in rescuing community assets. Could the West Midlands – including the WMCA and local authorities across the region – make more of the community asset transfer opportunity?
When considering community asset transfer, local authorities should start by reviewing asset portfolios to establish if there are any they would like to either dispose of or lease to a community-based organisation. Assets that are ripe for community asset transfer tend to be those with a low market value, but which are highly prized by the local community – for example, community theatres, libraries, social halls, skate parks or swimming pools. In many cases, councils may wish to keep these assets on their books, but they have become a drain on local authority resources.
Over the last few years, some local authorities have been forced to issue Section 114 Notices under the Local Government Finance Act 1988 due to their financial difficulties, and many others have been struggling to make ends meet. For these organisations, community asset transfer is an attractive proposition.
Community asset transfer works best in situations where council-owned assets are valued by local people, but they have become too costly to run. Instead of selling the assets freehold, the local authority might choose to offer a community-based organisation a long lease instead. Depending on the terms of the lease, councils can retain ownership of specific assets and preserve them for the long term, without being responsible for costs linked to their ongoing repair and maintenance.
With combined authorities and councils being encouraged to focus on high streets, and also to bring assets at risk back into positive use, there is a clear policy imperative to do more. Alongside this, the renewed focus on neighbourhoods through initiatives like Pride in Place gives a mandate for all public bodies to focus on local community involvement and ownership.
For community organisations interested in running and maintaining a council-owned asset, such as a village hall or a swimming pool, it is important to check the terms of the lease carefully. Securing a long lease, without break clauses, could be critical if the organisation is hoping to raise finance to make planned improvements or modifications. Any use restrictions should also be considered carefully, particularly if the business plan involves sub-letting part of the building. It may be possible to negotiate flexible use clauses where this is a particular concern. Regardless of the state of repair of a particular asset, a comprehensive building survey should be sought to avoid unwanted surprises that could incur significant costs.
With Andy Burnham’s Government focused on devolving powers to local authorities and Locality – a membership network representing local community organisations in England – calling for the Community Ownership Fund to be extended to enable more community involvement, community asset transfer seems set to become more popular.
As has been done in Birmingham and other parts of the West Midlands previously, if a community-based organisation spots an asset that it would like to buy or lease from their local authority in the future, they can list it as an Asset of Community Value (ACV). This is possible under the terms of the Localism Act 2011 and community rights in this area are due to be strengthened in the year ahead. Currently, if a local authority wants to sell an asset that has been listed as an ACV it simply has to wait six months before placing it on the open market. When the new community powers take effect, they will have to wait longer and offer to sell it to the community first. Listing assets now could place community groups in a favourable position if the council decides to sell them in the future. For local authorities, on the other hand, these powers could impact asset values and for this reason, it makes sense to bring forward asset reviews and engage with community groups to discuss asset transfer possibilities sooner rather than later.
There are some excellent examples of community asset transfer in the West Midlands. In Birmingham, Perry Common Community Hall was one of the earliest examples of community asset transfer in action. In 2008, as part of the Advancing Assets for Communities pilot programme, Birmingham City Council selected the hall as a pilot project for community asset transfer. Following a major programme of improvement works and an extension to the property, backed by a mix of community, local authority and grant funding, the hall reopened two years later as a thriving community hub with offices for Witton Lodge Community Association. Another example in the city is the regeneration of Stirchley Baths, completed in January 2016, which involved the creation of a community hub for sport and other community-run activities. This project was driven by an active community group in collaboration with Birmingham City Council and backed by the Heritage Lottery Fund.
Learning from these examples could prove beneficial for West Midlands Combined Authority and councils across the region as they consider ways to streamline costs and ringfence assets for the benefit of future generations. There may be multiple options to consider and professional advice should be sought if assessing bids from community-based organisations alongside those from private developers. Also, with ACVs likely to become more contentious in the future, it could be important to review listing processes to ensure that the specified tests for listing decisions are being applied correctly.
In general, it makes sense for the public sector to be as proactive as possible and ensure they are ready to engage. Lists of council-owned properties and other assets should be made public, with their current use categories shown. Stock condition reports and other asset-specific information should be compiled so teams are ready to share details with interested community groups. Having a policy statement in place to communicate the authority’s willingness to support community asset transfer could also help to encourage community-based organisations to come forward.
This is a personal blog post. Any opinions, findings, and conclusion or recommendations expressed in this article are those of the authors and do not necessarily reflect the view of the Centre for the New Midlands or any of our associated organisations/individuals.
ABOUT OUR AUTHOR:
David Alcock joined Anthony Collins in 1998 and has led the firm’s social business team since 2015. With over 30 years’ experience supporting social purpose enterprises, he advises and acts for a variety of community-run organisations including cooperatives, mutuals, as well as charities and other enterprises run for social good.
He advises clients on legal structures, governance and wide-ranging Board-related matters, including allegations of misconduct. He specialises in helping individuals and communities to form cooperatives and supports them in preparing constitutions. He also helps commercial enterprises to transition to employee ownership and guides local authorities to remodel public services through asset transfers or supporting spin-out projects.
David is passionate about empowering clients to create positive change in their neighbourhoods, communities or business sectors. This has been a driving force throughout his career, which began in Birmingham’s voluntary sector. He applies his insight and legal expertise to transforming organisations; helping them to make changes that will make the world a better place.
