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Bob Russell (Colchester) (LD): I want to raise concerns over the powers of the Audit Commission, which need to be strengthened if it is to do the job that Parliament had in mind when it approved the Audit Commission Act 1998.
An investigation by the Audit Commission into the accounts of Colchester borough council for the financial year 2003–04 has shown that the commission's powers are woefully inadequate. The 1998 Act needs to be amended, as suggested in early-day motion 1002, which I tabled and which has secured the cross-party support of Conservative, Labour and Liberal Democrat Members. It reads:
"That this House recognises that the Audit Commission is an independent body responsible for ensuring that public money is spent economically, efficiently and effectively; regrets, however, that its powers do not allow it to comment upon nor challenge property valuations which a local authority has obtained from a qualified valuer, particularly when the person is employed by the local authority; cites as an example the purchase by Colchester Borough Council of a property at auction for £755,000 and its subsequent sale privately to a developer for £650,000; and urges the Government to amend the Audit Commission Act to enable the Audit Commission, in situations where concerns have been raised, to obtain a valuation from two other valuers so that it can be satisfied that public money is being spent economically, efficiently and effectively."
The investigation, which was regrettably limited by the terms of the 1998 Act, was into matters that I drew to the attention of the commission. The commission accepted that the concerns that I raised over several property transactions in the St. Botolph's area of Colchester were such that they treated them as a valid objection. However, the terms of the Act meant that the investigation was limited, and aspects that I am convinced would have thrown more light on to the full picture could not be pursued. The jigsaw could not be completed because those doing the investigation did not have all the pieces and did not have the powers to look for them.
I have no regrets, and make no apologies, for the action that I took, which led to the lid being lifted on the secret way in which Colchester borough council has been engaged in property transactions in Queen street, Vineyard street and Osborne street that are associated with the council's plans to close the bus station, build a contemporary visual arts facility and redevelop the St. Botolph's quarter. The council is pursuing a planning mentality more akin to the 1960s than what should be expected from today's custodians of Britain's oldest recorded town. In the current issue of Private Eye, Piloti's "Nooks and Corners" feature takes Colchester council to task on this very matter. He describes councillors as "blinkered, self-defeating and stupid." It should be noted that English Heritage and the Victorian Society are dismayed, but the council's predominately rural-based Tory councillors are ignoring the views of the town's residents whom I represent.
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It is my contention that the potential loss to Colchester council's taxpayers caused by the way in which the council has bought and sold property, and what will flow from it, will over time run into several million pounds. The law states that each year, for a short period, local councils must make their accounts available for public inspection. I acted on that in September last year because I was puzzled about what was happening in respect of property transactions in Queen street. My inspection of the books for the financial year 2003–04 showed deals between the council and a property company based in Yorkshire—CFK Developments—which prompted me to ask the Audit Commission to look very closely at what had been going on. I am content to let Colchester's council tax payers be the judge of whether the findings of what was done in their name by the council were in the best interests of the town and its residents.
In my opinion, the conclusions of the Audit Commission are such that there should be an independent investigation into all matters relating to the closure of the bus station, the building of the contemporary visual arts facility and the redevelopment proposals for the St. Botolph's quarter. In the public interest, I believe that the Office of the Deputy Prime Minister should hold an inquiry. It would appear that the overwhelming majority of borough councillors were not aware of the property deals between the council and developers. The information was certainly kept from Colchester residents, businesses in the area and the local media. It is only because I have used my democratic rights as a local resident to inspect the council's books that I have been able to expose the following.
The council bought the Kwik-Fit premises in Osborne street for £755,000, having put in a bid at a public auction, but later sold them to CFK Developments, or CFK Investments, for £650,000—a paper loss of £105,000. Property prices have not fallen in Colchester; they have increased. Indeed, only today, a local company of property valuers told me:
"The main driving thrust of commercial property has been upwards in the investment market over the last five years, and this is due to amongst other things the lowering of Bank Rate which has made commercial property investment more and more attractive."
However, since the borough council had on both occasions received the advice of a qualified valuer—employed by the council—the Audit Commission had no powers to challenge it. Some might argue that the council's valuer had a conflict of interest, as his full title is head of social and economic regeneration. Early-day motion 1002 addresses the need, in such situations, for the Audit Commission to obtain a valuation from two other valuers, so that it can be satisfied that public money is being spent economically, efficiently and effectively.
My observations today need to be read in conjunction with what I said in the Christmas Adjournment debate last year at columns 2112 to 2115. That referred to other property transactions by the borough council involving the same Yorkshire-based developer, CFK Developments, and the subsequent formation with the Caddick group, also from Yorkshire, of a new company called Vineyard Gate Developments Ltd. Since last year, it is said that the Caddick group has acquired CFK's interests in Vineyard Gate Developments Ltd.
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Today, I will concentrate on matters relating to the Kwik-Fit premises—the phrase "quick fix" is perhaps more appropriate. The strategic purchase of the Kwik-Fit premises meant that there was an immediate increase—an uplift, I am led to believe, of at least 25 per cent.—in the value of the council's existing Vineyard street car park site, which it adjoins, and which is earmarked for a major commercial redevelopment. The enhanced value, however, was immediately lost when the council sold the Kwik-Fit premises at a reduced price—and a nearby site in Vineyard street—to the Yorkshire property company, which, at that time, I believe, did not own any property in the Vineyard street-Osborne street area.
The enlarged site owned by the council would have had a much greater value for the redevelopment now being discussed. Selling the Kwik-Fit premises—and a site in Vineyard street—was not only to the immediate financial disadvantage of council tax payers but weakened the council's position in subsequent development negotiations and the financial benefit to council tax payers in years to come. The council did not offer either the Kwik-Fit premises or the Vineyard street site on the open market to see if better prices could be achieved. I am sure that Members will agree that they are under the impression that local councils have an obligation to seek the best price possible when selling sites and buildings. The manner in which the borough council has engaged in property transactions with a single company, not put public assets up for sale, and not sought competitive bids for a major commercial development of an important part of Colchester town centre, leaves a lot to be desired.
It is not only the Audit Commission Act 1998 that needs strengthening. Changes also need to be made to the Local Government Act 2003 so that where there is a substantial level of objection to what a council proposes, its citizens should have the power to petition for a referendum. Parish councils are currently required to hold one when as few as 10 residents request it, yet district councils can ignore such calls regardless of how many residents make the request. A daft feature of the Local Government Act 2003 is that the council chooses whether to hold a referendum. As the saying goes, turkeys do not vote for Christmas.
The property transactions to which I have referred relate to the urban regeneration of what has been dubbed the St Botolph's quarter of Colchester. It includes plans to erect a £17 million contemporary visual arts facility, which will require a subsidy from the public purse of around £650,000 a year, and the closure of the town's bus station. There is massive local opposition, but the Tory-controlled borough council, most of whose members do not live in the town, is ignoring the wishes of the town's residents. Indeed, only last month the Tory councillors—supported by their fellow travellers, the so-called Independents—voted against Liberal Democrat and Labour councillors who had called for the issue to be put to residents by means of a local referendum, as set out in the Local Government Act. The Act needs to be amended so that if, say, 10 per cent. of those on the electoral roll petition for a referendum, the local council is required to hold one.
I hope that Members on both sides of the House agree that when a council submits a planning application to itself, involving its own land and from which it is the
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beneficiary, and when the application is in breach of the council's own adopted local plan which has emerged through the statutory planning process, the application should be subject to a public planning inquiry. That is the only way in which to restore public confidence and remove suspicions that the planning process is being abused by local councils, as is clearly the case in Colchester.
5.6 pm
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