Property investment firm set up by Chorley Council shuts down - without ever buying anything
A company established by Chorley Council to buy up properties that it was hoped would make a profit for the authority has been dissolved – without making a single purchase.
Cabinet members voted to axe Chorley BC Property Limited after hearing that a change in government guidance had prevented it from fulfilling its primary purpose.
The firm was established in 2019 as a vehicle for potential investments by the council which were intended to boost its budget and so benefit local council taxpayers – even if the assets bought were beyond the borough’s borders. The establishment of an arms-length company was considered best practice in the pursuit of that ambition.
Local authorities across the country followed a similar path in the mid-late 2010s as a way of attempting to offset the effects of austerity and previous cuts to central government funding for councils.
However, after some disastrous local government forays into the property market and other sectors, ministers effectively banned councils from using money borrowed from the Public Works Loan Board purely to generate a profit from investments.
Chorley Council has invested in several developments within its own patch in recent years – including the Primrose Gardens extra care scheme and the Tatton Gardens care, community and health facility – but the main aim in those cases has been the direct benefits they bring to residents. That meant they did not have to be funnelled through the authority’s wholly-owned private company.
Deputy leader and cabinet member for resources Peter Wilson told the meeting at which the dissolution of the firm was approved: “We had a vision of acquiring properties or housing and putting it into the property company on the basis that [it] was an investment item to give a return to the council.
“Since that time, the government have changed the rules on councils making acquisitions purely…in order to bring income into the council.
“We have to make sure that when we make investments, they are for purposes beyond yield …and therefore they are still under the council’s control and on our books.”
The meeting heard that the company’s only function since it became fully operational in April 2023 has been to deal with the lease arrangements for the Logistics House warehouse in Buckshaw Village which it purchased back in 2019 and continues to operate.
Although a profit-making exercise – it generates £747k a year for the authority after financing costs – the fact that it is within Chorley means it does not require management by the arms length company and can be controlled directly by the council. The authority’s purchase of the Market Walk Shopping Centre in 2013 falls into the same bracket – and also has the benefit of supporting the local economy.
Council leader Alistair Bradley added: “At the end of the day, there’s no point having [the company] if…times have moved on [and] the situation’s changed.”