BCP Council's plan to buy its own beach huts to raise millions of pounds halted by communities secretary Greg Clark
A PLAN by BCP Council to set up a commercial company to buy its 3,600 beach huts to raise £54m has been halted after being branded a "dodgy deal" by a government minister.
As reported in the A&T, the Conservative-led authority came under fire from opposition councillors for proposing to borrow against the value of the huts, such as those at Mudeford.
It wanted to set up a "special purpose vehicle" company, owned by the council, which would purchase the huts at market value using loans from third-party lenders in a deal that would give it £54m.
However, communities secretary Greg Clark has put a stop to the move, saying he was opposed to councils attempting to "abuse" a loophole to do "dodgy deals which only benefit the bottom lines of consultancies and accounting firms".
"Every council has a duty to use the tax they receive from hardworking people in a responsible way," he said. "That's why we are cracking down on accounting practices that put taxpayer cash at risk."
He has written to all council leaders notifying them of the closure of that loophole. BCP Council said it is now in the process of applying for a government loan instead.
The development sparked calls for the resignation of BCP Council leader Cllr Drew Mellor by Cllr Mike Cox, Liberal Democrat member for Christchurch Town.
"We've been trying to put a stop to this for the last six months," Cllr Cox said. "It's immoral and financially reckless and we couldn't understand why the Conservatives were pursuing this.
"We did everything we could to find out more of the detail, but Cllr Mellor has withheld vital information which would have enabled us to evaluate the proposals.
"We've spent a lot of money looking into this scheme – tens of thousands of pounds have been spent on advice from [accountants] KPMG alone – and now it's been proven to be, in the words of the minister, a 'dodgy deal'.
"Our MP Chris Chope has described it as a fraudulent scam, and I have every sympathy for his views.
"And Cllr Mellor's attempt to justify it all by saying that ministers are looking forward to working with them couldn't be further from the truth. Central government has called the scheme out and are appalled by the behaviour and they will treat BCP Council with extreme caution going forward.
"Whatever the government provides as help will be done with the strictest precaution."
"In my opinion, the leader of the council should resign over this."
A spokesperson for BCP Council said it had been "exploring various ways to make the most of council assets".
They said: "The letter from Department for Levelling Up, Housing and Communities (DLUHC) updates previous funding regulations and means that one of those options – the use of a special purpose vehicle to commercialise our beach hut assets and use the receipt to fund transformation – is no longer open to us.
"We will continue to support the application which has been made by council leadership to DLUHC for a capitalisation direction to fund our Transformation Programme.”
BCP Council will be investing £38m in its Transformation Programme by 2023, with the aim of "becoming a slimmer, more cost-effective organisation, closing the budget gap and allowing us to invest in frontline services and regeneration".