The Government’s hope that funds from property sales will compensate for a sharp decline in capital investment has been questioned.
Chancellor Alistair Darling announced in last week’s Budget that public spending in 2011/12 would increase by only 0.7%, which would mean that net capital investment would shrink from 2.6% of gross domestic product to 1.3%.
But the Government sees scope for £20bn to be released for investment in services by selling public sector property, including parts of the £100bn local government estate, excluding council houses (Surveyor, 23 April).
However, Alison Quant, director of environment at Hampshire County Council, and area cited by the Treasury as an example of good practice in identifying extra capital for investing in infrastructure through property sales, warned that this was only a short-term solution. She said: ‘We have been investing the proceeds of asset sales in the council’s capital programme at the level of around £40M. But this has taken a severe nose dive as we are no longer selling property.
‘Hence, I have lost another £5M a year off my capital programme, and have chosen to take £3.5M of that out of integrated transport in order to protect spending on highway maintenance.’
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