Shropshire Councillors have approved plans to sell 10 of its car parks which would bring in £30m and rent them back using a financial agreement called an ‘income strip’.

The council says the sale could help it access funding needed to secure its vital transformation programme to reduce its day-to-day running costs.

The deal would work like a mortgage agreement with a financial institution which would secure an upfront capital payment, which could be up to £30m, and then lease back the car parks for around £1.5m each year, with the chance to purchase these back again after 50 years. 

Under the controversial plans, the council would still keep operational control of these car parks, which would remain in public use, and the council would still collect car park income. 

Gwilym Butler, Shropshire Council’s cabinet member for finance, corporate resources and communities said: 

“We have been clear about the acute financial challenge we are facing this year, like many other councils, and the urgent need to reduce our day-to-day running costs this year. 

“There is a capital cost to some of our plans, and we need to innovate and think creatively about how we can raise the funds we need to become the council we need, and can afford, to be. 

“We have carefully considered the risks and there is still some way to go to complete due diligence on this approach, but using some of our car parks to unlock extra capital we believe is a sensible opportunity that could help secure our long-term sustainability at this critical stage.  

“Capital funding cannot by law be used to fund day-to-day costs of running services, where the pressure is most urgent. However, this could be a vital addition in helping to fund and accelerate how we transform to become the council we need to be – modern, efficient and financially sustainable.”