Do governments and councils ever realise the market value for their assets ?

On a report on the BBC East "Inside Out" programme tonight they featured the number of councils locally who own high value number plates, some estimated to be worth several hundred thousand pounds. The presumption of the article was that in these difficult times, councils ought to be selling these private plates, in order to cover the deficits councils are now facing.

I am no lover of council frivolities, and would certainly back the idea of councils selling off high value number plates. However, the "Inside Out" story also highlighted the poor value for money that council's sometimes get when the fail to understand the market in to which they are selling.

The example of Essex County Council selling their "F1" number plate was shown as a massive undervaluation of the number plate. Just two years ago Essex County Council got around £400,000 for the plate. The owner of this number plate has, in just two years, seen the value of this plate go up by more than 1000% with him reportedly turning down a bid of £5 million.

You would have assumed that it might be realised that an "F1" plate not only attracts interest from people who's names start with "F", not only people who want a plate with "1" in it, but also people who have any interest in Formula One racing. Whilst I am sure Essex County Council did everything by the book, did they achieve best value for council tax payers ? It appears not.

But it is not just councils who show a total lack of understanding of the value of an asset. The sale of Qinetiq, the defence and IT contractor, sold off for tens of millions of pounds less than its true value by the Labour government is a classic example of government failing to know the market value of an important public asset. Whilst almost every privatisation handled by the Thatcher government saw a small fortune thrown away meaning taxpayers missed out so that speculators could main a quick buck.

I'm all in favour of review of what council's do and own, and feel that councils need to become much better at their core services and worry less about peripheral activities and owning expensive assets and artwork which give no benefit to taxpayers. But lets see councils and government getting full value for assets, and if it means holding on to some assets in the short come so as not sell at a low point in the market, then I would support that. But council must show more common sense in their actions, and so must the government.


Alan said...

I agree they should get good value (and are stupid to sell quickly), but that should not be an excuse for holding assets they do not need.

My local district council (Breckland) bought a golf course and hotel a few years ago. Now, this is the truest blue-ist Tory council you could imagine.

What are they doing, effectively nationalising (or local govt equivalent) a hotel?! What special skills do they have? How can other golf courses or hotels compete with the state?

At a local level, it seems that petty power (the desire to lord it over the staff, I am sure) has overcome the councillors desire for not interfering in free markets.

Norfolk Blogger said...

Alan, I think we are broad agreement.

I would go further though, and probably sound something of a Tory in doing so, but I firmly believe that council should divest themselves of a whole host of non core activities.

I am not calling for the closure of sports centres and leisure facilities as these are within the very general remit of providing the community with an opportunity to have a swimming pool (something we lack in Broadland) or even public toilets, but councils do get involved with things that council really should be leaving to other organisations and agencies.

Roger Thornhill said...

Councils cannot get good value for their assets because those selling them are not the owners.

Likewise, councils cannot get good value when buying, because the person deciding is not spending their own money.

Ergo, Councils should buy and own as little as possible to avoid losses as the assets are acquired and later disposed of.

Stuart Winton said...

There was a similar news article in the Scottish press earlier this year, Mr NF, and I did a blogpost about it.