Sutton Council’s long-term investment plan is to spend £30m buying property in Oxford and then charging a charity to use it.

The building, a £29,890,000 site in Oxford Business Park, had been run by Aviva Investors Pension Property (AIPP) and has been Oxfam’s UK headquarters since in 2005. The Council’s investment strategy is to buy the building from AIPP and rent it out to the charity.

In papers published this week show that Sutton Council would charge Oxfam £1.69m a year, offering the charity a discount on market rates in the area.

According to the document, a record of decision taken under “urgency procedure provisions by a Council officer” and therefore not subject to public debate or scrutiny the net surplus of the deal after costs is £484k per year for the first four years with “potential further growth at rent reviews/lease renewals or new lettings over the 50 year financing period.”

The decision to spend £30m of the borough’s money outside of Sutton was criticised by opposition members while offering a peppercorn rent on the building was an insult to local causes which were being charged full prices in Sutton.

A spokesman for Sutton Council defended the decision and said: “This activity helps generate funds to support council services, which is vital at a time when we need other sources of income to offset government cuts to local authority funding.”

He added :“The Council is acquiring this property in line with its strategy to generate secure medium to long term income from property investments.

“Overall this meets the 2 per cent net return criteria agreed by the Council for property investments. Each sale or purchase is judged on its commercial merit and the purchase of Oxfam House was considered a good deal for Sutton.”

Aviva agreed to sell Oxfam House, in John Smith Drive, Cowley, in Oxford, to Sutton Council with an exchange taking place on Wednesday, November 23.

The decision was approved shortly after Thursday, November 17, and a title transfer took place six days later.

Tim Crowley, leader of the Conservative opposition group at Sutton Council, said money should be invested in the borough and added it was a decision to plug the gaps made by projects like the Life Centre.

He said: “As a group we do not understand why the council has not been more proactive in trying to invest directly within the borough. It would have the dual effect of showing confidence to investors and also bringing in the council a large chunk of business rates and support local employment.

“It is absolutely a move to plug the gaps made by projects, such as the Life Centre. The revenue of £469k per annum, after interest and costs, is not that far away from the subsidy to the life centre. Moreover when we are charging local charities and voluntary sector organisations full market rent why we are not charging Oxfam the same. We are told in the decision notice that the current tenants are paying over £5sq ft less than other tenants in the same business park.

“We are asking questions of the process and how the rate of return has been arrived at. We will also continue to ask why the council did not have the confidence to invest in the borough it runs and manages. We feel this sends out the wrong signal at a time when the council is constantly moaning about not having any money or resources.”

The purchase follows Sutton Council’s attempt to invest millions in a retail park in Reading earlier this year.

In May the Sutton Guardian reported that the council agreed an £18m deal to buy property in the Berkshire town from an investment company whose majority shareholder was under investigation by law enforcement and anti-fraud agencies in multiple countries.

The council later pulled of the deal with Lumina deal on May 13.

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