Manchester City Council sold public land too cheaply, report claims

The venture between Manchester Council and Abu Dhabi United Group has delivered almost 1,500 homes

Manchester City Council "sold the family silver too cheap" in sales of public land to Abu Dhabi United Group, a report has claimed.

The Manchester Off-Shored report looked at the Manchester Life regeneration in Ancoats and New Islington.

It said leaseholds were sold "below comparable rates" and criticised the length of leaseholds at 999 years.

The council said it disagreed with the report. The BBC has contacted Abu Dhabi United Group (ADUG) for comment.

Since 2014, the partnership between the council and ADUG - owners of Manchester City FC - has delivered almost 1,500 homes, mainly for rent.

The report by Sheffield University Management School and University of Sheffield researchers cited a number of concerns over transparency and accountability as well as what they called ethical issues.

'Tap global markets'

It said the council "sold the family silver too cheap" to ADUG and it represented "a transfer of public wealth to private hands [which was] difficult to justify as prudent".

The authority "held considerable bargaining power as the holder of land and development rights", the report added.

Prof Adam Leaver, one of the authors of the review, told BBC North West Tonight that bargaining power "could have been exercised a little more efficiently".

"We were surprised by the length of time of the leaseholds," he said.

"Effectively, [ADUG] hold this land for close to the next 1,000 years and we also think the price paid was lower than comparable deals in that area round about that time."

The report said it estimated the Manchester Life property assets' value total to be nearly £350m.

It acknowledged "the council has by necessity had to tap global capital markets for urban development projects due to its limited tax raising powers, whilst the owners of ADUG have incentives to diversify their investments out of oil and to improve their reputation on the world stage".

"There are thus, potentially, mutual economic benefits in a joint venture of the kind undertaken."

Prof Adam Leaver is calling for "more transparency" in the deal between the city council and ADUG

Mr Leaver said that while the council claimed it has an overage - a type of profit share - agreement in place with ADUG, the authors were unable to find any such payment made to the authority.

"We can't see how much profit, for example, the Abu Dhabi partners made," he said.

He added that Ancoats and New Islington was an area that required some development, but it was not a "complete wasteland".

However, he accepted that what has been developed was "far superior to what was there beforehand".

The report made a number of recommendations, including disclosure of any profit-sharing agreements.

Mr Leaver said there "must be more transparency on this deal and future deals".

The report also stated that there "must be more robust public scrutiny to ensure transparency around land and property deals to improve the balance of benefits for the Manchester public purse and wider community/environmental demands".

'Catalyst creating confidence'

A Manchester City Council spokesman said the authority rejected "any suggestion the sale of the sites in the Manchester Life joint venture was not a good deal for the council and the city".

"Land was valued by independent experts... and we got the best overall deal we could for each site, at a time when there was very little market interest in the area," he said.

He added that there were also site-specific overage arrangements and profit-sharing payments in place with the first payment of "several million pounds" due during this financial year.

"On top of this, the 1,500 new homes and the new businesses which the developments have made possible are generating significantly more for the city in extra council tax and business rates income," he said.

"Through concentrating £250m of private investment, at speed and scale, into Ancoats and New Islington, it has acted as a catalyst creating confidence and attracting further investment into the area.

"The area has gone from somewhere few people wanted to be to an internationally-recognised success story."

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