Shropshire Council agrees scheme to unlock extra capital funding from car parks

Shropshire Councillors have approved plans that could help it access funding needed to secure its vital transformation programme to reduce day-to-day running costs. 

The council will now look to sell 10 of its car parks for 125 years using a financial agreement called an ‘income strip’.

This is 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 a fee each year, with the chance to purchase these back again after 50 years. 

Under the 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. 

The additional receipt will help fund and accelerate initiatives that are already under way to transform how the council operates and reduce its running costs. 

 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.

Find out more about the council’s budget position Budget 2024/25 – becoming a financially sustainable council | Shropshire Council