A report has revealed Slough Borough Council acquired a site for 1,000 homes with no idea how it would fund the £250 million project.
The council bought the 11.5-acre southern section of the former Akzo Nobel site in February 2021 from Panattoni which had secured planning permission for the homes on the southern section of the site and a data centre on the northern section.
Now the bankrupt council is being forced to sell the site and a special meeting of its cabinet on Wednesday, November 2 is expected to approve the disposal.
A report to the meeting by Pat Hayes, executive director housing and property and Steven Mair, executive director finance and commercial, states: “The council agreed to purchase a site and potentially embark on a project which would have committed the council to at least £250m without any clear idea about how this was to be paid for or from where.”
The report also notes that a confidential report, issued at the time of the acquisition, failed to assess risks involved in the £38m purchase, including the fact the price was based on securing funding from Homes England which, if not available, mean £2.4m of Stamp Duty could be incurred.
In addition, simply owning the site is costing the council £4.1m a year in costs and interest.
Cllr Dexter Smith, who leads the Conservative group on the Labour-run council, told Thames Tap the southern section of the site had been bought by the council on the promise that big profits were to be made.
He said: “We were offered the prospect of tens of millions of pounds on profit on this site. Now, as we read in the report, the whole thing had been ill-thought through in the first instance. There was no plan for how to finance the housing development and we have this situation of effectively being bankrupt, adding to it.
“The council just lack forward thinking. The fact that they were committed to something that would have cost a quarter of a billion pounds, without knowing where the money would come from, is just staggering.”
He said the likely Stamp Duty and the £4.1m per year are all additional costs which were not evident at the time of the acquisition.
Avison Young, which is advising the council on the £600m of assets it has to dispose of, has marketed the Akzo Nobel site and from 14 bids, a preferred bidder has been selected although details are currently confidential.
A planning guide, published alongside the report for the November 2 meeting, states the site, which is allocated in the existing Local Plan as a business area, could be developed for a mix of employment uses rather than housing, with another data centre being one possibility.
However Cllr Smith said there are further concerns if that happened, including whether sufficient power would be available and the concerns of nearby residents about a data centre being so close to their homes.
Cllr Pavita Mann, the Labour deputy leader of the council, said: “Whilst we accept that the council at the time did not having the funding to finance what would have been our preferred mixed-use re-development, that in itself is not that unusual.
“Nonetheless, the site was still a very good purchase given the ongoing demand for industrial/commercial sites of this scale. This is reflected in the sale price which enables the council to recoup its expenditure many times over and I look forward to being in a position to transparently demonstrate just how good an investment this was for our town.”
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