Community Asset Ownership: DTA's position statement

Rental income from assets, as well as other fees and sales, generates independent income. On average development trusts’ assets produce a return of 6% every year, and every penny is reinvested back into the community. Local ownership significantly enhances local multipliers (LM3)

Development trusts use assets to deliver a multitude of activities: small business support, affordable housing, leisure centres, retail and restaurants, community woodlands, recycling, and local delivery of public services, according to what each community most needs.

Every boarded-up or derelict building, and every piece of empty wasteland, is a liability in a community. We do need to guard against the transfer of poor quality assets to community ownership, where they remain a liability. However, given the right vision, investment, and support, there are many cases where we can find a positive community use, turning liabilities into assets, and reaping multiple environmental and social benefits.

Community groups with assets are players: they have something to bring to the table, their partnerships with the state and private sector start on the front foot, and are much more likely to be productive. Community groups provide alternative routes of contact for people especially in disadvantaged communities: they have a ‘reach’ not available to government.

Development trusts take pride in their assets; their refurbishments are carried out to the highest quality. The action of developing and managing assets raises the game of local people, building networks and skills, reinvigorating participative democracy, and nurturing community-led enterprise. Development trusts establish both bridging and bonding social capital.

In 2003, following lobbying by the DTA and the Local Government association, the government issued the General Disposals Consent (England) circular allowing transfer of assets from public bodies to community organisations, at less than best consideration without requiring Secretary of State consent, where the undervalue was below £2m.

In 2003 the Scottish Executive introduced the Land Reform (Scotland) Act providing a community right to buy for rural communities in Scotland. In practice, this gives community groups the ability to register an interest in land or buildings, and a first option to purchase when they come up for sale.

In 2005 the Treasury issued guidance to accountingofficers, clarifying clawback procedures, and explaining that clawback (e.g. charges on assets for which public money had been used) should be applied proportionately and in ways that avoid becoming a disincentive for community enterprise. In 2006 the Treasury published ‘Improving financial relationships with the third sector: guidance to funders and purchasers’.

In 2006 Ruth Kelly appointed Barry Quirk to undertaken a review of community asset ownership and management. His report was launched at a development trust (Burton Street Project in Sheffield) in 2007 and states: ‘there are no substantive impediments to the transfer of public assets to communities. It can be done, indeed it has been done legitimately and successfully in very many places. There are risks but they can be minimised and managed – there is plenty of experience to draw on. The secret is all parties working together.’ Further guidance for asset managers has been published by CLG, including guidance on assessing and managing risk.

In England, Government has provided £15m to the Adventure Capital Fund to provide grants and loans (with business support) for community assets, and £30m to the Big Lottery Fund to provide capital grants for asset transfer. In Scotland the Big Lottery Fund has launched a £50m ‘growing community assets’ fund.

Independent grant makers have played a major role (for example Northern Rock Foundation, Esmee Fairbairn Foundation, and LankellyChase Foundation).

With Co-ops UK, DTA has embarked on a programme (with funds from the Office of the Third sector and CLG) to promote community shares and bonds, as a means to raise finance from within communities themselves as well as enhance community engagement.

DTA has called for a further £150m for the 2008-11 spending round.Government responded with the £70m Communitybuilders programme, which will provide investment for multi-purpose community anchor organisations, to help them acquire/develop assets and build up their trading activities and organisational capacity at the same time.This fund has been delayed but is expected to open for applications in June 2009.

The DTA has published guides (To Have and to Hold, Green Assets Guide) and delivered regional seminars and master classes, including the Viability not Liability series, with support from the Finance Hub, Capacitybuilders, and our Community Alliance partners, especially Community Matters.

DTA has also led a consortium (funded by CLG) to deliver Advancing Assets, a four year programme of advice for up to 110 local authorities and their partners to assist asset transfer. 72 local authorities engaged to date at the beginning of the third year.

In 2009 the DTA, in association with Community Matters, the Local Government Association, and other stakeholders, launched the Asset Transfer Unit (also funded by CLG), to provide technical advice to community groups, local authorities and others, and to carry out research and promote understanding of the community assets agenda.

The annual DTA survey shows that by summer 2008 development trusts had achieved a total of £489m of assets in community ownership. This represents a 12% rise on the previous year.

Local authorities: we have made a start but there is scope for much more. We want to see transfer of at least £100m of assets every year for the next 10 years. Local Authorities have combined assets of £249bn, so £100mn represents a tiny percentage of overall holdings

We must make sure that transfer does result in long term viability rather than liability – with a focus on a realistic business plan, and where necessary with investment and revenue commitments or endowments alongside the land or building.

Other public sector agencies: we need to extend the impact of the Quirk review to other parts of the public sector, notably health, police and fire authorities, Regional Development Agencies, and Government departments/non departmental government organisations such as the Ministry of Defence and English Partnerships.

Find out more at the Asset Transfer Unit website

We still need a UK wide-version of Community Right to Buy, for urban as well as rural areas, to create a ’window’ for community groups to bid for land and buildings of strategic and sometimes iconic significance to a community.

We need access to a mix of capital grants and patient loan finance for community asset purchase, refurbishment, and new-build, combined with revenue funds for initial feasibility, project development, and to strengthen management and financial competences.We have called for £250m for the next three years.

We need to do more incentivise new approaches to finance.As set out above we are promoting community share and bond issues. Community Investment by individuals should be linked to Gift Aid tax relief.

Above all there is a need to introduce a UK version of the Community Reinvestment Act that exists in the United States and which has ensured a flow of finance from the banks and other financial institutions into poor communities – financial inclusion as the “price” for society’s guarantee of systemic risk.

There are opportunities to use community asset ownership to strengthen communities in new town developments, to increase the supply of affordable housing by retaining a community interest in land, to enhance environmental impacts not least in new eco-towns, and to create a community legacy from the 2012 Olympics.

In the recession, there is a once in a generation opportunity for community asset acquisition in order to provide the foundation for resilient communities.The investment we are calling for will allow us to take advantage of that opportunity.We are exploring community ‘landbanking’ and other fast-track mechanisms that enable a fast response to the economic downturn.

In the meantime, there is the need for imaginative ‘meanwhile’ asset initiatives, so that community groups can take over empty shops and put them to good use, avoiding the economic and social blight of boarded up premises on our high streets. See the Meanwhile Use website for more information