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The Guardian - UK
The Guardian - UK
National
Jon Ungoed-Thomas

Bournemouth council accused of ‘casino capitalism’ over beach hut sale

The huts on Avon Beach, Mudeford, could be sold to a ‘special purpose vehicle’.
The huts on Avon Beach, Mudeford, could be sold to a ‘special purpose vehicle’. Photograph: Alamy

The multicoloured wooden beach huts lining the golden sands of Bournemouth and Poole were in full use once again this weekend as adults basked in deckchairs and children built sandcastles.

These simple structures on this famous stretch of the Dorset coastline are highly sought-after, with typical waiting times for a long-term rental ranging from five to 20 years. However, some users are now worried about plans by council bosses to cash in on the huts by selling them to a “special purpose vehicle” (SPV) to boost their budget with a £54m windfall.

The financial scheme proposed by the Conservative-led Bournemouth, Christchurch and Poole (BCP) council involves selling the huts to a company controlled by the authority. It will generate a large capital receipt for the council for new investment.

The proposed arrangements face mounting scrutiny, with questions raised in parliament over the scheme and a local backlash.

Mike Cox, a local Liberal Democrat councillor, said: “This is the worst kind of casino capitalism and people are appalled by it.” He described it as the type of scheme which would be devised by Gordon Gekko, the anti-hero in the 1987 film Wall Street.

The value of many of Britain’s beach huts has climbed steeply in recent years. The council has already built 131 larger “super huts” over the last decade which have sold for about £40,000 each, raising more than £5m.

Some of the UK’s most expensive beach huts are located at Mudeford Sandbank in Christchurch. The Observer has been told one of them recently sold for more than £500,000. It is about 20 minutes walk from the road, with a fitted kitchen, a seating area which can be converted into two double beds, and a mezzanine level.

Lizzie Manetta, 60, who pays £2,700 a year to rent a hut at Poole, is among the long-term beach hut users anxious about the proposed scheme. She said: “I am concerned because it’s already expensive to have a beach hut and it’s going to limit who can rent them if they put the prices up.”

She added the huts needed to be looked after and were a treasured asset for the local community. She said: “One night this week, I went down to the beach, had a swim, made supper and then watched the sky go from this lovely blue to pale pink. It’s amazing.”

Holidaymakers and beach huts on Boscombe Beach, Bournemouth.
Holidaymakers and beach huts on Boscombe Beach, Bournemouth. Photograph: Adrian Sherratt/Alamy

Under the plan, the 3,605 beach huts at Poole, Bournemouth and Christchurch would be transferred to the new company in a deal mostly funded by third-party debt.

The huts are rented from the council or privately owned with annual ground rent.

The new structure would provide a device under which the council could exchange the annual rental income – worth about £5m a year – for a large one-off payment. The council has not disclosed the financial and advisory fees involved or any proposed rent increases.

The scheme, devised with the support of professional services firm KPMG, was approved in principle in a council budget meeting in February. The detailed proposals will be discussed later this month.

A council document outlining the scheme states: “As the SPV is owned by the council, and once the senior debt has been repaid, this means that at the end of the 20-year period the council could collapse the entity and return the assets to council control or could choose to refinance the assets again.” The project is described as a “bold, nontraditional approach to the financing of local government”.

It is proposed the money is used for adult and children’s services, and for the council’s “transformation programme”, which is increasing the digitisation of services.

A “save our beach huts” group has been launched on social media in response to the plans. Campaigners want to see the KPMG report on the scheme, two independent valuations of the beach huts and a full business plan of the proposed SPV.

Sir Christopher Chope, the Conservative MP for Christchurch, last week raised questions in parliament about the proposal. He wants it to be reviewed by officials to check whether it complies with local authority guidance on capital receipts.

Chope said: “This seems an extraordinary way of behaving because it seems at odds with the principles of local government to protect the interests of council tax payers.”

He said the concern would be about the quality of services provided to beach hut users by the new company, and the possible rent rises.

BCP council said: “The proposal to explore a [SPV] to make our beach huts more commercial was approved as part of the 22/23 budget. No formal decision has been made.

“We are working through the details of how we could use a special purpose vehicle and a report is scheduled to go to cabinet [this month]. This includes any impact on rents and investment opportunities.”

KPMG declined to comment.

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