Council’s secret plan to sell farm for £5m to contractor

Martin Shipton

A council is planning to sell a farm for £5m to one of its major contractors in a secret deal that excludes any other potential buyers from bidding.

The proposed deal was approved in principle at a behind-closed-doors session of Powys County Council’s cabinet on September 19, when councillors considered a report marked “not for publication”.

The report has, however, been leaked to Nation.Cymru. It argues against putting the 218-acre property at Leighton near Welshpool out to competitive tender because the £5m bid from the locally based Potter Group is higher than a valuation made by a land agent earlier this year.

The Potter Group, which already owns a neighbouring farm, describes itself as the largest independent waste disposal firm in Wales and has a significant contract with Powys council.

The leaked report stated: “The subject property is currently leased out under two farm business tenancies – Gwyn’s Barn and ex-Severnleigh Land – and a periodic tenancy, Howys. The property currently extends to 218 acres and comprises Gwyn’s Barn (174.53 acres), includes a three-bedroom farmhouse and range of landlord buildings; ex-Severnleigh Land (39.81 acres); Howys (3.86 acres), including a modest, detached listed cottage.

“An offer has been received for the purchase of the freehold of the property at the figure of £5m, subject to the existing tenancy agreements. The offer is considered to significantly exceed the market value of the property, which was independently valued by Cooke and Arkwright at £4.13m on April 21 2023.

“The purpose of the offer submitted is to enable the potential purchaser to continue to grow and develop a significant and high value local business, which employs local people and supports other local supply chain businesses.

“For completeness, it should be noted that the offer to purchase the holdings has been made by an individual who is known to the council and who has a significant contract with the council for delivery of specialist waste services. The offer is not related to said business.

“The offer submitted to the council is on the basis that council consider a sale of the property as an ‘exceptional circumstance’ under the Corporate Asset Policy (CAP) and the asset is not placed on the open market.”

Exceptional circumstances

A number of “ exceptional circumstances” are described in the report, none of which apply to this transaction. However, it is pointed out that under the council’s policy, other instances can be considered on a case-by-case basis.

The report states: “The current offer represents a premium of more than 20% over the independent market value and is made in a period of rising interest rates and uncertainty as to the future basis of subsidy support for the agricultural industry.“

In terms of resource implications for the proposed sale, the report says: “Collectively the three elements of the farm have a ‘carrying value’ in the balance sheet of £1,985,000. The sale would create a capital receipt of £5m, which would be able to support the capital programme. The receipt will reduce the need to borrow to finance the council’s capital expenditure, saving around £300k per annum at revenue borrowing costs over an estimated 35 years.

“The holdings in this report provide a revenue income of £29,100 per annum, with annual maintenance and management costs of some £580 per annum. The sale will result in a net revenue loss of £23,280 to the farms revenue budget. The loss will be mitigated by increases to regular income from future farm lettings.”

Comments from senior officers in the council’s finance, legal and housing departments back the proposed sale as good value for money.

The report also states: “If this proposal is approved, the tenants’ rights must be maintained until the end of the tenancy and assurances should be given that the current tenant will be communicated with in a timely and appropriate way about this sale, if this decision is approved.”

Surplus

The report recommended that the property should be declared surplus and the council accepts the offer without undertaking external marketing on the basis that the offer is deemed exceptional and far greater than could reasonably be expected to be gained in a competitive market place.

It added: “The relationship between the potential purchaser and the council should be considered and noted as being considered by those making the decision, so that any allegations of bias or preferential treatment can be rebutted.”

The decision was taken to proceed with the sale of the property.

Cllr Aled Davies, leader of the Welsh Conservative Group on Powys County Council, said: ‘’I am extremely concerned that the Liberal Democrat/Labour cabinet potentially made an unsound decision last Tuesday. To make matters worse it was done behind closed doors in a confidential session.

“I tried to intervene before the cabinet went into confidential session, but I was prevented from doing so. Since then, more evidence has emerged that adds to my doubts about not only the transparency of decision making but whether the full facts were known by all.

“Consequently, I am calling on the leader of the council to take responsibility and address these very serious issues. The leader must publish the full facts and the cabinet must reconsider their decision in an open and transparent manner. It is the least that Powys residents deserve.’’

A spokesman for Powys County Council said: “Cabinet considered a confidential report and recommendations from the County Farms Working Group and heard from the Chair and members of the group regarding the sale of a property. Cabinet resolved to approve the recommendations in the report. We cannot make any further comment as the report was confidential.”