Local councils will be allowed to keep all of the money raised from asset sales to reinvest in local services, the chancellor announced today, as part of a wider move to encourage the sale of hundred of billions of pounds of public sector land.
In his Autumn Statement speech, chancellor George Osborne said locals governments are sitting on property worth a quarter of a trillion pounds.
The government will encourage councils to sell land by allowing them to spend 100 per cent of their receipts from asset sell-offs on improving services and local projects. That includes thousands of pubs, theatres , golf courses and restaurants currently in local government hands.
JLL’s head of residential research Adam Challis, said the announcement was “a very strong and positive move and for many councils will be vital to rebuilding balance their balance sheets”.
Councils were previously banned from using money raised on local services and therefore lacked any incentive to speed up the release of land, Challis said. "By creating this alignment it means they will be far more engaged with the programme of disposal because they will see the gains directly from that disposal,” he added.
Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "Allowing councils to keep the revenue from asset sales should see more action taken by local authorities to rationalise their registers instead of hiking Council Tax. However, they shouldn't use this new policy to dodge tough spending decisions, as taxpayers want their local politicians to prioritise frontline services over non-essential items of spending."
Osborne vowed to double the housing budget to meet the government’s ambition of delivering 400,000 affordable homes by 2020-2012.
He pledged to release £4.5bn of government land and property to make space for 160,000 homes, while unused commercial or industrial land will be released for starter homes.
Previously developed brownfield sites in the green belt will also be allowed to be developed in the same way as other brownfield land, providing it contributes to Starter Homes.
Several “old victorian prisons” in city centres will also be sold to make way for new housing developments, Osborne said.