Putney Garden Centre - 'an absolute duty to manage council affairs honestly and prudently'

Gerald Jones - the Chief Executive of Wandsworth Borough Council on the sale of the Putney Garden Centre site.

Councils have an absolute duty to manage their financial affairs honestly, prudently and in proper accordance with the law. There are very strict limits on what individual councillors may or may not do with penalties for non compliance including ultimately disqualification.

As Finance Officer and Monitoring Officer respectively, it is the duty of the Director of Finance and myself to ensure councillors do not take financially or legally improper decisions.

I am aware that individual councillors have been subjected to enormous pressure to allow the disposal by sale or lease of council-owned land at 1 Dryburgh Road to its current garden centre occupier for a sum or on terms that would not reflect true current market value.

However to do so would be a clear breach of the Councilís legal duty to obtain best consideration and the fiduciary duty owed by the council to all its residents in all parts of the borough.

Where a Council does arrange to subsidise e.g. through a grant a commercial operation there must be clear reasons for doing so Ė for example that the enterprise is employing and training people with learning difficulties, or otherwise making a contribution to meeting special needs of some sort. It is perhaps relevant to note that even where the Council has sold or let school buildings to the independent sector it has always done so at full market value.

The council has a statutory duty of Best Value which requires it to review all services including its property portfolio over a five year period. In fact the council has a longstanding policy of disposing of all its surplus land that is not needed for its own services. This policy is strongly advocated by both the Audit Commission and the Government.

Therefore when the tenantís lease was approaching its end the Council reasonably decided to review the landís use and to obtain a realistic valuation in keeping with long-standing practice. In fact given its previous planning history and the Councilís fiduciary duty and duty to obtain best consideration, the Council was obliged to protect Council tax payersí interests by realising any development value by making a planning application for residential use.

The Council of course was fully aware that a planning permission for residential use (in addition to the existing retail consent) would maximise the value of the land. To pretend that there was ever an option of ignoring this prospect is to misunderstand totally the nature of councilsí legal responsibilities for the publicly held assets in their care.

The decision of the Policy and Resources Committee to release the site and invite offers from would-be purchasers was made unanimously in November 1999. It is important to recognise that there has never been any suggestion that a reasonable policy supporting a sale at an under-value could or should be developed.

A short tenancy settled now at a lower rental in the hope that the loss this would represent could be recovered by an enhanced receipt some time in the future is to indulge in property speculation. Councils have no right to gamble with public money.

It is perhaps not always fully understood just how tightly the rules for councilsí conduct in property and financial matters are drawn. Ultimately it is my responsibility to ensure that these inescapable obligations are scrupulously respected in all transactions and that the councilís reputation for integrity, legality and fair-dealing is preserved.

Gerald Jones

Chief Executive and Monitoring Officer

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Details of the Sale