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Councils in Scotland have an opportunity to transfer assets to the community – why is it not happening?

This short paper suggests that as councils in Scotland now have an obligation to transfer assets to the community, they need to be more proactive. Are there practical steps they can take to not only overcome the barriers that exist but also to minimise their risk? And in so doing, achieve regeneration, economic and place-making success in their communities, with reduced costs?

Under the new Asset Transfer section of the Community Empowerment Act, community groups who meet certain criteria can now request to buy, lease or use any estates, land or buildings owned by the public bodies, even if the assets have not been declared surplus.

But once the local press have written their stories, the ink has faded from grant funding applications, and enthusiastic volunteers have found new, more interesting, projects, what happens to the community assets? What happens should asset condition start to deteriorate? Who retains the ultimate risk? The reality is that, if things go wrong, local authorities are left carrying the can.

Why are more transfers not being achieved? Is it a lack of resource in local authorities to undertake due diligence, a lack of appetite to transfer assets, or a concern about community capacity to manage the assets?

It is well known that local authorities have significant budget black holes to fill and continue to rationalise their built assets to reduce costs. It is difficult to justify the retention of some of the built estate ahead of cuts to services such as social care, education or emptying the bins.

The best outcome for local authorities would be to transfer some of their assets in a way that reduces the risk to them, ideally to organisations that are:

• Community-led: respected in the area and with local interests at heart;
• Charitable, with established governance arrangements, possibly regulated;
• Experienced in managing property assets, and their associated finances;
• Sustainable with business plans that shows how a surplus can be achieved whilst also maintaining the asset effectively; and,
• Used to working in partnership with local authorities and other public sector bodies.

Undoubtedly there are lots of community groups that have many of these attributes. For those starting on the journey, there is good advice and useful resources available from the Community Ownership Support Service, part of the Development Trusts Association Scotland.

To reduce their exposure to risk, councils need to assess the competence of community groups. There’s a lot of upfront preparation that can be done such as feasibility studies, business cases, business plans, and financial models. MainStreet has helped many of its clients in these areas but to make things easier, we’ve developed a checklist that local authorities can use to ensure sufficient due diligence has been undertaken, and to give a clear recommendation on asset transfer.

But it’s also worth mentioning that the attributes listed above also describe most Registered Social Landlords (RSLs). They are present throughout the country and although they principally offer affordable housing, they also deliver wider role services that benefit their local communities in areas such as employability, welfare advice and place making. Have local authorities approached the RSLs in their area to establish what appetite and opportunities exist for asset transfer?

RSLs may question what is in it for them but there are increasing numbers of RSLs establishing subsidiaries to deliver non-housing services. The RSL option would allow councils to reduce their cost base whilst minimising their asset transfer risk, and, who knows, it may be the start of RSLs offering additional services to local authorities in the future… but perhaps that’s best left for a subsequent paper.

If you would like to discuss any aspect of this paper, or would like to use our asset transfer checklist, then please contact us.

Mark McLintock, Director, MainStreet Consulting
0131 228 5225 or 07805 540999

Mark is an experienced management consultant, with 20 years’ post MBA experience, who has worked with over 40 different public sector organisations providing valuable strategic advice. He is a Board Member of Ore Valley Housing Association.

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