BCP Council beach hut sell off axed after government action

Levelling-up secretary Greg Clark MP has stepped in to call a halt to the local authority’s intention to create a majority or wholly owned company which would have bought thousands of huts to fund transformation.

In the past couple of weeks BCP Council leader Cllr Drew Mellor remained positive over the option to create the special purpose vehicle (SPV), insisting it had government approval.

It has now come to light that ministers are changing the rules around the flexible use of capital receipts.

Cllr Mellor confirmed to the Daily Echo today that the SPV plan would not be proceeded with.

Sir Christopher Chope MP, who has been an outspoken critic of the beach hut sell off, said he hoped the move from Mr Clark would “save the council from themselves”.

Mr Clark is expected to send a letter to all councils tomorrow in which he will confirm he is tightening up the rules around how councils use funds unlocked from selling assets to close a loophole.

Levelling-up secretary Greg Clark

In a statement provided to the Daily Echo, Mr Clark said: “Every council has a duty to use the tax they receive from hardworking people in a responsible way.

“It’s not right that some councils have attempted to abuse a loophole to do dodgy deals which only benefit the bottom lines of consultancies and accounting firms.

“That’s why we are cracking down on accounting practices that put taxpayer cash at risk.”

Under the council plan, the SPV would have purchased the beach huts along Poole and Christchurch bays at market value using mostly third-party debt and an additional shareholder loan from the local authority. This transaction would provide the council with the circa £50million needed to plug a hole in its budget to fund transformation of services.

Two weeks ago, Cllr Mellor said an alternative option of borrowing the large sum was being discussed with central-Government instead of the beach hut sell off. At the time he said it had been confirmed the SPV proposal was within the rules of the flexible use of capital receipts regulations, a statement he repeated in an interview with BBC Radio Solent last Wednesday when he said several times that government had approved it.

In a statement given to the Daily Echo, Cllr Mellor said: “The beach hut securitisation plan, the principle of which had been agreed a year ago with a previous secretary of state, was designed to pay for our ambitious transformation programme which will save over £50m per year. It also avoided the need to have to sell assets such as our car parks to pay for this huge saving and keep council tax low which we have done with back-to-back council tax freezes.

Cllr Drew Mellor

“Whilst we are disappointed that the rules are being changed to prevent this plan, despite this being agreed at the highest level, this is happening in the context of a positive, direct conversation with senior ministers about a simpler, clearer way to fund our council modernisation programme.

“We welcome this level of collaboration and are now encouraged that this new offer to fund our ambitious plans without having to resort to complicated methods will achieve the result we always wanted.”

Cllr Mellor said the authority is in the first wave of local government reorganisation, which had already achieved recurring savings of £50million since 2019.

He said direct discussions with ministers over funding signed off transformation plans through borrowing were ongoing.

Conservative MP for Christchurch Sir Christopher told the Daily Echo he was very pleased the government had taken action.

“The government made it quite clear if there was any attempt to try and get round the letter and spirit of the rules then they would intervene and that is exactly what they have now done,” Sir Christopher said.

“My understanding from having spoken to the minister is that the council was strongly advised not to go down this route and when they made it clear that that was what they were going to do, the government decided for the avoidance of doubt to issue the direction which it has now done and change the regulations.

He said: “Basically we have a council that was trying to do something which it was being strongly advised by a Conservative government not to do and in the end the government has had to intervene to save the council taxpayers of BCP from a potentially significant loss.”