A number of councils across the UK have been forced to consider the sale of school playing fields to property developers. Since 2010 we have seen 215 school playing fields sold off to developers in the UK. The situation is no better in Scotland, Wales and Northern Ireland where austerity is still impacting education budgets. However, is there an alternative solution to the funding problem?
Before we look at a potential alternative to the sale of school playing fields, it is worth noting that childhood obesity levels are now at record highs. So, in a perfect world’s schools should be investing in more playing fields, and encouraging exercise, as opposed to reducing the number of playing fields. We have seen governments right across the UK promising to rein in the sale of school property but to no avail.
Is there an alternative?
If we take a step back and look at the situation from a distance, there are many relatively old schools across the UK which will require significant maintenance and repair in the short, medium and longer term. Indeed, many of these schools may not be worth saving and the trend towards consolidating schools/building new ones will continue. This is where the potential to raise capital in the short term may interest councils.
Sale and lease back
Surely councils across the UK must have considered the sale and lease back of school property and actual schools to raise additional finance? They could put in place a long-term guarantee that the school would be available to rent until the council saw fit to move facilities. This would allow the raising of significant capital in the short term, transfer maintenance and repair obligations to the buyer and allow councils a degree of flexibility with regards to moving in the future.
The most obvious candidates to undertake this type of operation would be property developers looking to increase their landbank. They would also create a potentially lucrative rental income stream from local authorities. As soon as the councils decided to move educational facilities elsewhere they could simply knock down the old school and apply for planning permission. Indeed, it would make sense for planning permission to be part of the original sale and lease back agreement thereby removing any uncertainty going forward (and increasing the value of the land).
Do local authorities need asset backing?
When you consider the cost of repairing and maintaining schools across the UK this must be something of a drain on local authority funding. Indeed, there will come a point when repair and maintenance is not cost-effective and funding would be required for new premises. So, this begs the question, do local authorities really need any form of asset backing?
It would certainly be more straightforward if councils simply rented schools from landlords. However, there would need to be guarantees to ensure services could continue until a mutually agreeable time. When you consider the scarcity of new development land across the UK, local authorities must literally be sitting on billions of pounds of assets which are costing more and more to repair and maintain.