Burnley Council loses £350,000 on ‘school site’ homes

8:30am Wednesday 10th March 2010

By Kate Turner

BURNLEY Council has been accused of ‘gambling with taxpayers’ money’ after it spent £500,000 to buy four homes on the site of a proposed super school which did not go ahead.

All the houses in Melrose Avenue and Kinross Street were then sold for a total of £149,000 when Lancashire County Council decided to build the new Hameldon Community College on the former St Hilda's site off Coal Clough Lane.

Council leader Gordon Birtwistle, who represents the Coal Clough and Deerplay ward, said the county council had 'dropped us in it big style'.

But Mark Townsend, who was chairman of the Audit Committee at the time the houses were bought, said the council had been gambling with taxpapers' money.

He said: "This is a prime example of this council taking unacceptable risks with public money.

"The council believed that if the county council decided not to locate the new college at Melrose Avenue, which was always the likely outcome, it did not matter because they had secured property assets and they would only go up in value.

“They are no better than the bankers at that time and were gambling with taxpayers money."

The county council requested the borough council to buy the properties in mid-2007 using Elevate funding to stop money being taken out of the county council's schools budget.

Coun Birtwistle had said he had been 'extremely hopeful' County Hall would reimburse the borough after it opted for the former St Hilda's site, leaving the council with four redundant properties.

But it is understood no money will be paid back as contracts were never signed saying a school would be built on the area surrounding Melrose Avenue.

Coun Birtwistle said: “We bought these properties in a deal with the county council to enable the start of work on the new Hameldon College site.

“We were in advanced negotiations with them, and they knew very well that we were buying the properties, then at the last minute they decided to change the location of the school.

“We believed that we could trust them but they proved to be untrustworthy on this occasion.”

The homes have since been sold to borough housing landlord Calico, which owns the majority of properties in the area.

The £350,000 loss on the properties emerged following questioning by the Conservatives at a scrutiny committee meeting.

Mike Hart, Lancashire County Council's director for capital investment and resources for children and young people, said: "We reached agreement over this issue with Burnley Borough Council in 2008.

"At the time, all three parties involved – ourselves, Burnley Borough Council and Calico Housing – were aware of the inherent risks of the project and no guarantees were ever given that the project would progress beyond the feasibility stage."

Burnley Council chief executive Steve Rumbelow said: "The over cost of acquiring these homes included home loss and disturbance payments and those clearly are not recoverable when the properties are sold.

“These properties were purchased two years ago and have already been dealt with as part of the council’s accounts.”

The controversy comes after the council bought the Derby pub, on the M65 roundabout at junction 10, for £290,000 but then decided to pull it down.