Staggering amount of money coming to council from ASDA deal

A major, major boost to the council’s finances is on the cards from the ASDA deal – but it’s unclear if the council know they’ve disclosed it, as they officially refused to give it to us.

Monopoly money graffiti:

The deal with ASDA for the land just outside Newport is expected to bring a huge amount of money to the Isle of Wight council.

It’s money that’s desperately needed due to the Government cutting back their funding so hard, forcing them to dip into the reserves.

The figure was buried in the paperwork for last night’s Executive meeting.

On page E-36 of Appendix H of Paper E (told you it was buried), next to ‘ASDA Receipt investment’, the amount is revealed – £20,000,000 (yes, that’s £20m).

Was revelation mistake?
It’s unclear if this amount should have been revealed.

OnTheWight put a request into the council earlier yesterday for the figure, after we’d spotted “substantial capital receipt once it enters into a lease with ASDA” elsewhere in the paperwork.

After a bit of back and forth we were told, “the amount will remain confidential until the lease is complete.”

What’s understood is the money will only come to the council if the planning application decision for ASDA, given in December 2014, is not challenged.

Update 13.17:
Since publishing this article, the council say the £20m figure is an estimate of the council’s expected proceeds after all of the costs associated with the transaction have been met. They also say the £20m figure was not included in the budget paper by mistake.

In the news
The owners of the land adjacent to where the new ASDA store is planned – South Coast Leisure (SCL) – were in the news last week, as they are requesting an option to buy redundant council land surrounding the site, the budget papers also reveal an anticipated “substantial capital receipt once it enters into a lease with ASDA”.

The paper


Article edits: Clarification on funding affecting reserves and update from council.

Image: togawanderings under CC BY 2.0

Wednesday, 14th January, 2015 8:42am

By

ShortURL: http://wig.ht/2cGD

Filed under: Business, Isle of Wight Council, Isle of Wight News, Newport, Top story

Any views or opinions presented in the comments below must comply with the Commenting 'House Rules' and are solely those of the author and do not represent those of OnTheWight.

Leave your Reply

77 Comments on "Staggering amount of money coming to council from ASDA deal"

newest oldest most voted
Geoff Lumley

Why do you think they don’t want an application for Judicial Review ? It was pretty clear there was a massive potential capital receipt at risk……

Sally Perry

Most people weren’t aware of it though Geoff, hence Simon’s article drawing it to their attention. Hopefully now, more people are aware of it.

Geoff Lumley

Fair enough.

retired Hack

Yes you can see why they don’t want an application for Judiciial Review. But it’s also profounldly unsatisfactory that it’s apparently going to cost us £100,000 to avoid one; and that there isn’t going to be any Scutiny of that situation. Would you have dis applied call-in, Geoff?

Geoff Lumley
rH – Two months ago I wouldn’t have disapplied Call In without at least prior scrutiny. Last week I probably would have as I have lost all faith in the Call In functions of this Council – every Call In outcome subsequently ignored by the Executive, bar minor one. However, there could have been an extraordinary meeting of Scrutiny Committee tomorrow evening to match the extraordinary Executive… Read more »
Mark Francis

Will the IWCC keep the money or will central government just cut £20m off their grant & say you already have this money?

What happened to “planning gain” from previous deals – e.g. Ryde Airport? I understand that was a leisure centre which has since shut.

Sally Perry

According to the paperwork, it looks as though the capital receipt would go to the council, who say they’d initially make short term investments with it.

Vix Lowthion

Good grief. That’s most of the budget shortfall for the next few years. A huge amount of money.

I’m not sure I am comfortable about that. It completely changes the way you view a planning application.

derek

Could be a game changer now the Island knows the IW Council may have this £20m coming in will Town and Parish Councils want to take on Services and will Schools Fund School Crossing Patrols.Will Council Taxpayers want to pay more?

Jonathan Bacon

Don’t confuse capital and revenue. Yes you could deal with the budget shortfall for a year or two but then the money’s gone and the revenue shortfall is still there.
I was the Member for Planning at the time the application went through and we were extremely careful to keep the planning and budget sides of things completely separate as one must do for fairly obvious reasons.

derek

But the Service is gone. There maybe a change in Government.

Geoff Lumley
The Secretary of State for Local Government, the appalling Eric Pickles, has frequently said that Council’s are sitting on massive reserves that they can use to shore up services if they feel they haven’t enough government funding. This Council no longer has massive reserves (due to the spendthrift days of Andy Sutton(Con) and Joe Duckworth, 2005-07), but they will if they get this receipt. Personally I believe… Read more »
davimel
Where on earth is £20m coming from? IF ASDA are paying this for the land and possibly road works then how will they get it back? They are only going to get a share of the existing market, which many think is already saturated with supermarkets, and we only have around 80,000 shoppers on the Island which means they will have to grab the lions share, AND… Read more »
East Cowes IOW

ASDA is Walmart. They have plenty of money. ASDA will destroy Newport businesses. That is how Walmart made all of its money in America.

Cynic

Walmart is thought by some to be one of the worst employers in the US. Google some of the anti-Walmart sites.

East Cowes IOE

Exactly my point. They are horrible employers – extremely well-documented, including the largest class-action lawsuit against them – and Sam Walton’s children are the 6th, 7th, 8th and 9th richest people in America. (Statistics from 2013).

Mark Francis

Well at least there will be jobs created to take up the people who lose theirs from stores that go out of business- unless we can get people to consume (presumably eat)more.

Cynic

Yep- more zero-hours contracts, more part-time jobs at below minimum wage, less eligibility for benefits, more false claims by government that employment has increased.

I do not believe it

Why on earth do ASDA want to build a huge super/hypermarket here when most of the grocery market leaders who make up its direct competitors (including TESCO) are currently planning to close their huge stores across the country because of the demise of ‘big once-a-week’ shopping trips? Sainsbury’s announced 500 redundancies only yesterday.
It’s all rather odd. £20m to splurge on a, generally reckoned to be, dead duck?

JohnR

Apparently the Council are going to invest the £20m and get a whopping 1% interest!

Surely with that amount of money a better interest rate could be found on the money markets.

Cynic

How much would Wightlink cost?

Geoff Lumley

You could probably afford the lifeboats from their ferries….. could be very handy

wolf of wall st

better interest rates? please tell us where these are. Oh and don’t forget they have to be triple A rated, the Council aren’t allowed to gamble with our money. I await with interest (sic)!

Ariadne

How about using some of this money to fix Totland sea wall and Undercliff Drive?

The Sciolist
Well, well, well. The secretive independent council has some explaining to do. They kept this quiet eh? Not only will they not put an actual figure on the total revenue figure (income) for 13/14 and 14/15 so that we can compare spending power, they have kept quiet about this £20 million. Eric Pickles says they are getting less than 3% cut from the total revenue, spending power,… Read more »
Bazaldog
How about that money is put into a trust fund for the Island with trustees chosen from a ballot to support vulnerable Islanders and help those who cannot afford a university education from home because of the ferry fares? If the money was carefully invested in Island businesses there may be a better return whilst also promoting growth. There is also the added bonus of stopping council… Read more »
Mark Francis

Its called a Sovereign Wealth Fund. The Norwegians get money from North Sea oil.
TSB say they are paying 5%

bill lucas
Some of this money was earmarked for replacement of the floating bridge in East Cowes, around £3M, is that still the case I wonder. Putting the money in a piggy bank is not the answer for many reasons, putting the money into a project that generates income for IOWC over the next 100 years would make sense. It would be hard for some on the IOWC to… Read more »
bill lucas

davimels comment

I am always perplexed by the statement that this new super market will create so many new jobs. Do we all start eating more, No some place some company closes and looking at Tesco’s trouble it could be there.

william
Headlines such as “staggering amount of money” are always going to get lost of comments, and this is no exception. I think we need to look into the detail before we start playing – lets have a go at the council, a favorite pass time of island residents. Depending on the time scale which the money is paid over it wont be staggering at all and even… Read more »
Mrs Richards

What makes you think that the use of staggering doesn’t mean it’s seen as a good thing? I did!

Cal
I STRONGLY disagree with you, william, because: 1) our Council chose to keep quiet about their prospective income. 2) no matter how you wish to talk down twenty million pounds, twenty million pounds over however-long-a-period is still twenty million pounds! (Which I think is a lot!) 3) that this kind of payment has been accepted from ASDA as part of their planning approval makes it appear a… Read more »
East Cowes IOW
5) The IOW makes too many short-term decisions that can hurt the island’s economy long-term…..like bring in an American store that will decimate Newport for years to come, by putting ASDA – outside of the main town – affecting not only the supermarkets and other grocers in Newport but also significantly decrease footfall in the town, closing other shops. Many people come into Newport to do their… Read more »
Geoff Lumley

William – As a frequent critic of this Council, I found your email to be breath of fresh air on this blog. Well said.

Vix Lowthion

How is this not a bribe? Not accusing people – but the value of the land is not £20 million? So what is the term to describe this…. A ‘processing payment’? What is the correct term or the term the council are using?

Geoff Lumley

Surely land is worth what the purchaser is prepared to pay, though I was astonished how much when I found out after the planning approval last July.

Vix Lowthion

Totally agree that land is just worth what it’s worth… but the figure is huge. Staggering is right. What is Pennyfeathers worth? 900 houses… This is just a supermarket.

Cynic

“Worth” (i.e. value) is calculated by “perceived benefits received” divided by “perceived price paid”.

Each party will have perceived the benefits of the deal differently concentrating on their own wants and needs

Phil jordan

Vix Lothian:

look up section 106…….

Vix Lowthion

Yes I’ve seen section 106 elsewhere but not with that price tag

phil jordan

vix lowthian:

Investigate Brent Cross in North London….. a £4 Billion development.

Cynic
Brent Cross (per the Times) “THE latest approved measures for the £4.5 billion regeneration scheme at Brent Cross Cricklewood will help give “real control” of the project to stakeholders, according to development boss. The plans were given the green-light for a second time at the end of last month, following a series of delays, and developers now have three months to finalise the financial assistance they will… Read more »
Cynic
A common developer’s strategy. * Agree s.106s during planning negotiation * After approval and construction completed, seak “Relaxation of conditions. Such relaxation usually slips though the planning process without much fuss owing to changes in planning staff, changes in Council planning committee (especially if adifferent political party is in control), lack of public attention to the request changes and so on. How many major developments on the… Read more »
retired Hack

The price tag reflects the scale of the project. S106s are a mechanism for community payback, not a bribe. They are very well established in planning law. This one has never been a secret, even if the estimated figure had not previously been given.

East Cowes IOW
But it still is a type of bribe – bribing the community to do something against its best wishes in the long term with a little payout now in the short-term. It might be legal, but it is still a way for the Council to do short-term decisions in their best political interest that will most likely damage the island in the long term. That is mortgaging/gambling… Read more »
phil jordan
East Cowes IOW: Section 106 ‘money’ is not a “bribe”. The Town and Country Planning Act 1990 enables local authorities to negotiate contributions towards a range of infrastructure and services, such as community facilities, public open space, transport improvements and/or affordable housing. The Authority has no control of commercial enterprise operations and merely responds to their actions insofar as development (and legality) is concerned. The whole matter… Read more »
East Cowes IOW
Phil Jordan – I know all of that. The point is – again – whether it is legal or not, it is an incentive for Councils to sell off assets for short-term gain, where they get “political” credit (both politicians and officers) for some short-term cash. The resulting money has such limitations on it that it cannot be used for services but instead one-off, capital investments with… Read more »
I do not believe it

Well said ‘East Cowes’!
BTW – whenever I read or hear phrases like “staggering amount of money” viz. £20m being given by ASDA, or our own government to a post earthquake disaster fund, I always remind myself that £20m might get you 8 or 10 modest flats in South Kensington or a couple of houses in Mayfair.

CB500

Phil. Who picks up The bill for the new sections of road that are going to have to be added?

Geoff Lumley

Barretts. It is their responsibility to provide a residential access road through the Pan Meadows development from Staplers Road to St Georges Way, just by the Asda site. They have paid the Council the money to procure building the section by the Asda site. Its in next year’s capital programme.

phil jordan

CB500:

As far as I am aware, the majority of the road works that are required (and planned pre PFI contract) are to be funded by the Council but, in turn, funded by the section 106 money.

I would have to double check that but I *think* that is the case.

Peter Whiteman

What’s silly about this is, the IW Council were always going to get a large amount money for the land and we would of had a Asda quicker, if the local business people tryed to get in on the act by the other application.
And if we had the money earlier. Would it of saved some services ? I don’t know maybe.

watchdog

Blogs are more effective when they get spelling, grammar and punctuation right.

Cynic

Presumably you mean “correct”? :-))

watchdog

Thank you, Cicero, for trying to be clever but, as you well know, “right” is not wrong – it just happens to be wider in scope. In fact, my Oxford dictionary gives 24 different meanings, of which No.4 is “correct or true”. Moreover, I don’t give a toss about down arrows for defending the English language.

Cynic

@watchdog You would have been busy in the Golden Age of English Literature and you might have received more down-arrows than the French at Agincourt!..:-))

For your instructive comment, perhaps you really meant to write “Bogs are more effective (if) (bloggers) use correct spelling, grammar and punctuation”?

Yep! “Pedants drool, OK!” Where has my tissue gone? :-))

Geoff Lumley
Very possibly Peter. As the Council would have had the payment much earlier and would have had time to plan how they could use it without falling foul of financial regulations. As it is it could still help save some services, if there was a will to do so. I suspect there isn’t after listening to both the Indy and the Tory group leaders at Executive on… Read more »
derek

It is odd that at the time of making Council Cuts they have £20m coming in?

derek

Geoff,It is starting to look like this Council is going out of it’s way to do as this Government(Tories) asks of them.Which people did not vote for.

derek

To add The interest paid on the £20m,about £200,OOO will pay for a couple of Council Officers?

Geoff Lumley

Derek. I’m beginning to think you could be correct. And don’t forget the Lib Dems are as guilty in this government as the Tories.

anon
Geoff and Derek. It is very hard to go against what government want you to do when government does not supply the money to do anything else. Geoff, I thought you might realise this, but it seems more and more to me that you talk lots, but fail to acknowledge reality on occasion. Perhaps you can convince us all otherwise – but I suspect you will instead… Read more »
East Cowes IOW
“anon” – I do believe that is a politically naive thing to say. Sometimes taking a stand is the only way to correct things. It’s better to ask the question “why did Geoff stand down? (Over what issue?) my observations of him is that he is passionate about issues and is quite “blunt” in his language, but is far from being a quitter….if he were, he would… Read more »
anon
If you dont know, perhaps you should find out. The stories about it on here paint a picture of Geoff objecting – then shouting down other councillors in a meeting. Opposition should be effective, but not obnoxious, and Geoff seems to be increasingly obnoxious when things dont go his way. This isnt about effective opposition or bluntness – we all know Geoff is good at that. This… Read more »
East Cowes IOW
My goodness! Geoff raising his voice is news??!! What about Steve Stubbings and Ian Stephens and many others – including senior officers – who have had right strops, yelling at people and stomping out of public meetings last year? Hardly a petting zoo of politicians, this menagerie! Again, what was the issue over which Geoff tendered his resignation from Scrutiny Committee chairmanship? That is the issue.
anon
Just because others do it doesnt make it right. Geoff wants to be effective opposition – his behaviour has prevented him from being effective. Its that simple. Again – if you dont know the details, look them up. Search this site for Geoff Lumley and Im sure it will come up. My problem isnt with Geoff being a lively character – its with Geoff being rude and… Read more »
Geoff Lumley
East Cowes IOW: I resigned as Scrutiny Chair, but not from the Committee, for two main reasons. 1. Because of the way the Executive were railroading through a consultation on Surplus Secondary School Places without allowing prior sight or scrutiny of the data that supported their published contention that Medina & Carisbrooke Colleges should merge; 2. Because the Leader of the Council would not allow me to… Read more »
Geoff Lumley

Anon – Re. “I think £20 million might be just the breathing space that this council needs against continued cuts from national government”. I think you will see that is precisely what I argued earlier in this thread, but which the Council leadership seems reluctant to pursue. Hence, the post to ‘Derek’, which offended you so much !

East Cowes IOW
Thank you, Geoff. I already knew that, as I read the On The Wight article about it. But I wasn’t sure that other people on this thread had. It was a decision not to be taken lightly. But if the Council is preventing proper “peer scrutiny” of itself – and, at times, disallowing scrutiny by the press as well – that is a HUGE problem that needs… Read more »
anon
“I already knew that, as I read the On The Wight article about it. But I wasn’t sure that other people on this thread had” All you had to do was ask… “We need scrutiny of the schools, of planning, of all aspects of the Council.” And that will be achieved by Geoff standing down how exactly? “I think you will see that is precisely what I… Read more »
East Cowes IOW
Phil Jordan – I asked that you provide a document that demonstrated that the Council (as individual members or as a group) did fight against ASDA’s planning application, like the Americans do to fight Walmart. Can you please provide the link to such a document on the Council’s website? I would like to see that you did your utmost to prevent this from happening, giving the dire… Read more »
phil jordan
east cowes iow: Councils’ (planning committees) don’t just object and overturn planning applications because they don’t *like* them. There has to be ‘material planning considerations’ for rejection. There are development areas, non development areas, local development plans, area action plans,planning regulations, planning legislation, planning inspectorate, statutory consultees, design agreements, contributions to infrastructure, local Ward Members, a planning committee …just to begin with. Any objection to a planning… Read more »
East Cowes IOW
Phil Jordan – once again, I know all of that. As you (should) know, there are plenty of mechanisms – formally and informally – that the IW Council has to protest or block – formally or informally – planning applications. Would you like me to list all of them? Again, I would like to see evidence that the IW Council, as a body or as individual members,… Read more »
anon
Who says that the council DID object? Just because some americans objected, doesnt mean that the IOW council have to. As Phil says, the council cannot object just because they dont like it. Phil’s post sounds very carefully worded, and I suspect that is because he is legally restricted on what he can say, but reading what he has said carefully makes me think that the council… Read more »
East Cowes IOW
Again, you doing too much what I know. Also, you should think about the implications of a Council with allegedly “no power” to turn down planning applications. That permits bribery of all sorts legal and otherwise. A reiteration of a well-known, published planning process does not an expert make nor is it an indication that all rules have been followed. All of that information is Wikipedia-worthy common… Read more »
East Cowes IOW

*Again, you do not know too much

Cynic

Big companies can scare off small local councils by threatening to go to appeal if their request is denied. Walmart’s pockets are far, far deeper than IWC’s!

It will get worse with TTIP!