Councillors’ flutter on the commercial property market has plunged Faversham into millions of pounds of debt for the next half-century. Why?
Faversham Eye reveals the startling true costs of Faversham Town Council’s controversial 12 Market Place project:
• 50-year debt will cost the town £2.6 million • Cost of mortgage payments and rates tops £65,000 a year • Debt is eight times town council’s annual budget • Offices will cost at least 20 percent of council budget EVERY YEAR • Magna Carta project still £800,000 short of cash
When Faversham Town Council signed mortgages to buy and refurbish the disused former Stead and Simpson shoe shop in the Market Place, it saddled the town with 50 years of debt.
Borrowing £1.1 million from the Treasury’s Public Works Loan Board, the council bought the building in 2016 to convert into its new offices; a controversial move in a time of austerity, food banks and unprecedented cuts to public services.
With interest that debt balloons to a staggering £2.6 million.
Independent Ben Martin, the only town councillor to vote against the scheme described it as “grotesque” and a “vanity project”. Unimpressed Faversham residents called it “foolish and irresponsible”, “an expensive folly”, “bonkers”, “megalomania” and “a complete and utter waste of money”. Two years after it was waved through behind closed doors, details about the project’s true costs remain scarce, leaving Faversham people guessing at the bill they and their children will be paying for the next half-century.
“There continue to be many myths about 12 Market Place,” laments Nigel Kay in Faversham Town Council’s latest newsletter. “There are also a lot of incorrect figures banded (sic) about the costs of the building as well.”
Using facts and figures obtained under the Freedom of Information Act, Faversham Eye can at last dispel some myths about the million-pound shoe shop.
Let’s begin with claims made by councillors to justify spending two generations of taxpayers’ cash on their plush new headquarters…
“The Town Council will own the property and not have any rent to pay which saves a huge amount of money over the next 50 years.” Nigel Kay
Before buying the shoe shop for £580,000, Faversham Town Council rented offices at the Alexander Centre. In 2016, rent charges were £5,811 (£10,338 including service charges) per annum.
So what are we paying now? Beyond repeating that the shoe shop loan is ‘fixed’ and ‘low interest’, town councillors have been conspicuously unforthcoming with specific figures.
Repayment schedules obtained by Faversham Eye however reveal mortgage costs totalling £43,500 a year. Add £22,000 business rates and the property is costing Faversham £65,500 a year. That’s 20 percent of the Faversham Town Council’s entire annual budget of £328,638.
In addition, town councillors have allocated two more payments of £60,000 and £50,887 from its budget to the shoe shop project in the last two years. Faversham Town Council latest budget figures reveal the building’s running costs to be a further £12,500, plus another £21,900 for promoting the building as a ‘heritage hub’. That’s a total of £110,000 this year, or 30 percent of the council’s entire budget.
Since the shoe shop project was conceived, the town council’s budget has ballooned by 50 percent. Spending on services has not.
Despite enjoying its own comfortable new premises, Faversham Town Council is still paying over £10,000 per year to rent space in the Alexander Centre, according to its own 2017-18 budget figures.
If the council continued renting offices at the Alexander Centre at £10,000 increased by 2.5 percent over 50 years, the total cost would be under £1 million, compared to the £2.6 million cost of the shoe shop loan over the same period.
So where exactly is this ‘huge saving’?
“The cost to people in the Town will be 20 pence a week.” Nigel Kay
A cute way of saying the shoe shop will swallow up one fifth of the town council’s entire current annual budget – meant to pay for public services – every single year. A conservative estimate: spending on the project accounts for around a third of the latest budget.
“It will be a valuable asset that could be sold if ever it was not needed.” Nigel Kay
A bold claim, based on enormously wishful thinking.
Given the slow death of the British High Street, the rise in abandoned retail properties, Stead and Simpson’s failure to keep the shoe shop open and struggle to find a buyer, Nigel takes a surprisingly rosy view of its future value.
Like most mortgage lenders, the PWLB makes borrowers repay interest first. So if, for instance, councillors decided to cash in their ‘valuable asset’ in ten years’ time, townspeople would have paid £309,434 in interest and still owe £987,722 on the mortgage.
If – and it’s a big if – a buyer could be found, the sale would likely mean a heavy loss to the taxpayer. That’s without factoring in early repayment costs which could be huge if interest rates rise as expected. Offloading the property, especially in difficult times, would be financially painful if not ruinous. And if the council defaults, the PWLB will take repayments directly from the council’s budget.
“Many of the similar towns to Faversham including the other Cinque Ports Towns have their own freehold offices.” Nigel Kay
Faversham Town Council – a parish council in all but name – already owns the freehold on town’s spacious Guildhall.
“One of the things that was holding the Council back was the lack of an accessible Town Hall like most other Town Councils own.” Shiel Campbell
Following requests from the public, the 50-capacity, 89 square metre Guildhall was made disabled accessible in 2016 at a cost of £46,870 (plus VAT).
“A loan from the Public Works Loan Board on a very low, fixed interest rate, rather than rent to pay, allows us to predict future costs whilst increasing the asset base of the Council.” Shiel Campbell.
Future costs will be predictable… colossal but predictable. More than £65,000 per year plus the building’s running costs.
A national government body, the PWLB sets no limits on how much money councils can borrow, leaving councillors to decide what is affordable.
Local councils’ primary responsibilities are ‘representing your local community, delivering services to meet local needs and striving to improve quality of life’ according to the National Association of Local Councils. Building a property portfolio or ‘asset base’ does not normally fall within a town or parish council’s remit.
But the growing problem of “casino councils” exploiting low-interest Treasury loans to bet on the property market, was investigated recently by The Times. And in an attempt to protect taxpayers’ money meant for services to local people, the Government introduced tougher spending guidelines in April 2018.
“Authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed,” said Communities Minister Sajid Javid, while Independent Peer Lord Oakshott described the practice as “a gigantic game of Monopoly with taxpayers’ cash”.
Despite the risks and warnings, Faversham Town Council borrowed much more than most other local councils for its shoe shop property punt.
The UK has 10,000 town or parish councils and around 95 of these receive PWLB loans per year. The average amount borrowed is £185,000, making Faversham’s £1.1 million loan almost six times the average.
“The Town Council is very ambitious for the future of the town and wants to maximise the services it provides,” Shiel Campbell
The £65,500 (£78,000 including running costs) we are now paying for the shoe shop every year could – and should – be spent on services for local people. Cynics might suggest that Faversham Town Council is very ambitious for the future of Faversham Town Council.
“I hope people in Faversham will be excited about this project.” Nigel Kay
One might imagine that before deciding to take out a massive loan for their new offices, councillors would ask the people who will be paying it back until 2066.
But no. They voted to buy the shoe shop in secret, after excluding the public and press from a Faversham Town Council Meeting.
Nigel Kay, Shiel Campbell, Bryan Mulhern, Ted Wilcox, Anita Walker, Geoff Wade, Mike Cosgrove, Trevor Abram, Nick Green Claire Belsom, Pete Flower, John Ogden-Starkel all voted for their expensive new offices in ‘private session’ on 8th February 2016.
Only Independent councillor Ben Martin voted against. “The way they have gone about it is not acceptable,” he said. “It should have been down to the public to decide.”
Faversham Town Council eventually opened a fortnight-long consultation period with a public meeting on 29th March 2016, several weeks AFTER its offer had been accepted by the shoe shop’s owner.
Councillors claimed: “It could not be discussed before as there were concerns that the vendor would increase the price if they knew who the purchaser was.”
Yet the sale didn’t go through until June 2016, months after the scheme was made public.
According to Faversham News report on the consultation results “out of 168 responses, 100 were positive and 68 were deemed negative and the council went ahead with submitting a planning application”.
This is odd for two reasons: Firstly, the town council submitted its planning application for change of use on 16th of February, more than a month BEFORE its public consultation. Secondly, Faversham Town Council’s consultation documents show 81 comments for, 68 against and 15 unsure or unclear. Include ‘straw poll’ comments made at the 29th March consultation meeting and the total is 89 for, 79 against and 24 unsure or unclear. Hardly unanimous support, especially since the poll question neglected to mention the scheme’s multi-million pound price tag.
“Much progress has been made behind the scenes following the purchase of 12 Market Place to function as a permanent exhibition space for Magna Carta and Charters.” Shiel Campbell
Contrary to belief, the council did not borrow the £1.1 million to provide a permanent home for Faversham’s copy of the Magna Carta. The money was borrowed to buy the building and convert it into council offices.
The proposal to create an exhibition space to house and exhibit the 700-yearold, £20 million document inside the shoe shop is a separate project requiring a new shopfront and the best part of another million pounds extra funding.
For that, the council is gambling on winning grants. An application was made to the Heritage Lottery Fund this year for a grant of £813,000. It was refused and the HLF advised Faversham Town Council not to reapply.
To comply with planning permission, the council must start work on the new shopfront within the next two years. If no grants are forthcoming, where will the money come from? Another massive loan?
Meanwhile Faversham’s historic charters are being stored with Kent County Council’s Kent Archives in Maidstone at a cost of £1,200 a year.
What about the insurance premiums for keeping the £20 million Magna Carta in the shoe shop? Faversham Town Council doesn’t know, because, as it admits in response to our most recent FOI request, it hasn’t yet investigated the insurance cost.
“Obtaining the freehold is necessary to maximise the grants that can be applied for. It is hoped that over £600,000 of external grants will be obtained.” Nigel Kay
The ever-hopeful Nigel fancies that, with cash pouring in from magic grant trees and historic paperwork proudly displayed, the shoe shop – freshly rebranded as a ‘heritage hub’ – could one day rival Kent’s top historic tourist attractions.
“We really hope that we can put Faversham on the map – similar to the pull of Dover Castle,” Nigel Kay
Dover Castle was ranked Trip Advisor’s number one Kent attraction, with 333,239 visitors in 2018. Without wishing to be accused of talking down Faversham’s appeal, it seems unlikely that a shoe shop, however grandly refurbished, will draw the same crowds of eager tourists as the iconic English Channel fortress.
“The opportunity to buy the freehold of 12 Market Place… gave an opportunity to “invest” in the future of the Town that might never occur again.” Nigel Kay and Geoff Wade
Several Faversham town centre shops currently lie empty. The former JC Lock and Safe premises for instance, just across the road from 12 Market Place is currently for sale; a far from rare occurrence, sadly.
Supporters of the council’s scheme suggest that turning a shopfront into offices will somehow economically stimulate town centre businesses.
Others in the town believe losing another prime central shopfront will have the opposite effect. Some remember when coffee chain Costa applied for permission to move into the former shoe shop in 2014. Faversham Town Council objected on the grounds that "the proposed change of use would be contrary to the policy of retaining retail uses in the core shopping area.”
Planning permission was refused. Two years later Faversham Town Council applied for and won planning permission to turn the same town centre retail unit into offices and an exhibition space.
“What 12 Market Place offers… possibility of income generation both for the project and the wider local economy.” Geoff Wade
It’s difficult to see how it can make money, given that the downstairs exhibition space can ONLY be used for showing off Faversham’s historic artefacts. Planning permission restrictions strictly outlaw ANY other uses, commercial or otherwise.
Perhaps one day the council’s gamble will pay off, another million will fall from the magic grant tree, the new shopfront will be finished on time and Faversham’s fascinating old documents will attract tourists by the coachload.
But until then, the shoe shop’s ground floor is back where it started; an empty, unused space. Only now it’s costing the town £78,000 a year.
WHICH SHOE FITS?
A far-sighted investment in Faversham’s future, or an ill-judged financial albatross that will dangle around the town’s neck long after the councillors responsible have shuffled off to that great committee meeting in the sky?
All The Facts
This story was researched using documents both in the public domain and obtained by Freedom of Information Act requests from sources including Faversham Town Council, Swale Borough Council, The Land Registry, The Bureau of Investigative Journalism, The Faversham News, The Public Works Loan Board, www.gov.uk, The National Association of Local Councils, TripAdvisor, The Times and The Guardian.
Faversham Town Council answered most of our questions under Freedom of Information requests but refused to reply to several inquiries. Nevertheless, every effort has been made to ensure that all reported facts were accurate at the time of publication.
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