§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]1.44 am
§ Mr. George Robertson (Hamilton)
I am grateful for the opportunity to raise the matter of the Government's conduct in disposing of the buildings and land of the former college of education in Hamilton. The issue, which was described so graphically by the Glasgow Herald last week as a "sorry and squalid episode" has left the local community and the wider population of central Scotland shocked and dumbfounded. People of all sorts and stations, from all political parties and none, were appalled when they heard that a fine set of buildings in a large and beautiful site in the centre of an industrial town could be sold at a jumble sale price.
Moreover, there is dismay at the way in which the sordid exercise was conducted with official silence amid a cloud of rumours and leaks that ultimately revealed that the lowest bid for the college was accepted by a Government whose Minister with responsibility for education in Scotland claims to be a chartered accountant. The indecency of the secrecy that covered up—it is a cover-up—the catalogue of unsavoury dealings that led to the decision is surpassed only by the incredible outcome of the sale.
The first is the bargain basement price for the college, the land, the playing fields, the swimming pool, the giant sports hall and the rest. They were gift-wrapped and presented to Mr. Charles Oxley's new private school for the staggering sum of £270,000. The second was the disposal of the student residences to Miller Homes for a trifling £410,000. When there is an acknowledged chronic shortage of student accommodation locally and in nearby Glasgow, it is little short of criminal for 600 custom-built student rooms to be handed over to property speculators for little or nothing—barely the price of the land. When there is still the suspicion that part of the valuable buildings could be demolished—an eventuality that the Minister refused to rule out—the displaced students can be rightly aggrieved.
The cynically cavalier way in which the Government have dealt with the genuine public concern about the sale serves to underline the deep suspicion generated by the affair. The startled announcement shaken out of the Scottish Office as a result of multiple leaks in all the newspapers and the Minister's grossly flippant, irresponsible and questionably legal offer last Wednesday to sell the buildings to me for £3 million, displays a contempt for sincere public disquiet at the mysterious disposal of public property. Public feelings have been further rattled by the disclosure that higher offers were submitted but rejected.
§ Mr. Martin J. O'Neill (Clackmannan and East Stirlingshire)
Does my hon. Friend agree that the Government's approach to the sale was in keeping with the way in which they announced the closure of the college? The announcement was made at the fag end of a parliamentary Session at a time designed to cause the maximum inconvenience to Scottish Members. We have come to expect such almost under-the-counter dealings and sleight of hand from this Minister when he is dealing with unsavoury and unpopular decisions for Scotland.
§ Mr. Robertson
I am grateful to my hon. Friend, who pinpoints the historical context of the debate. The House 987 has well chronicled the events from 1977, from when the Minister campaigned so vigorously with the hon Member who now represents Southend, East (Mr. Taylor) against the Labour Government's intention, later changed, to close down some colleges of education, to the disgraceful decision to close Hamilton college of education. The Government have resisted concerted public opinion in Scotland, especially in Lanarkshire. That is characteristic and only the tip of a nasty iceberg that covers up many of the Government's dealings in public affairs.
The Minister's explanations of the background to the sale and those of his officials carry no conviction. An un-named spokesman told The Scotsman last week that two offers were made in addition to the accepted one. He said:In neither case were the offers attractive because of the conditions attached to the offers.The Minister told the House last week during Scottish Question Time thatThe strings attached to the other offers were unacceptable."—[Official Report, 17 November 1982; Vol. 32, c. 271.]
What were the conditions? We have heard nothing about them. When shall we be told what the conditions were? We know that one other offer was from a company called Hamilton Property Developments Ltd., a consortium of local business men, which offered £95,000 more than the successful bid, but which was turned down. What was the company's unacceptable condition? It made only one condition—that it be granted outline planning permission. The question must therefore be: why was that unacceptable? What was it that made it wholly unattractive?
I have also to disclose that since the Minister, in his ebullient, rash generosity offered the college to me in the House last Wednesday, Hamilton Property Developments Ltd. has written to him again, withdrawing even the minimal condition in the original offer.
If the Minister can offer the buildings to me, will he now accept the additional £95,000 from Hamilton Property Developments Ltd., condition-free? Will the Minister give me an answer to that question this evening?
I also want to know why Hamilton Property Developments Ltd. was asked to increase its first offer of £500,000, which it did, on 23 July, to £650,000, yet it was not asked to increase it again. Why was the next word that it received the newspaper story that the college had been sold to a lower bidder? Is that the way that this Government of parlour accountants conduct their business?
Why will not the Minister tell Parliament what he is doing? Why is he so determined to continue the cover-up when the stones already turned have produced enough crawling things to disquiet most normal people?
There is the reserve price, a concept that even the Minister's accountancy training, however threadbare, cannot have missed out. Was there any reserve price? Was there any bottom line to the deal? Would, for example, the Minister have accepted an offer of £1,000 if it had been the only one that had been made without conditions? If not—I bet that it would have been "not"—what was the bottom line? Why was it not far higher than the inconsequential £680,000 that was finally achieved?
Who advised the Government on selling that property? Did that body not put a reserve price on the property? Did it not advise that a better price could be obtained inevitably 988 when the market was not so depressed? If it did not—it apparently operates in the commercial market—one hopes that it does not sell houses in the same incredible fashion.
It is only fair to clarify with the Minister whether he cares about the purchaser's credentials for the college.
I believe that Mr. Charles Oxley, the successful bidder, is a sincere and dedicated man, even if he is importing an alien and unnecessary form of elitist schooling into Lanarkshire. However, it is the economics of his operation that disturb me. They seem strange, even bizarre. Even when his school eventually has a full complement it must lose a lot of money. Calculations that I have made and which are based on Mr. Oxley's fees show an annual income of £480,000 a year but a minimum expenditure of £591,000 a year. Has the Minister bothered to examine that, or does he not care about the commercial viability of a purchaser? What happens to the college and the land if the venture fails? Were those factors taken into account when the offers were being considered?
Even the parlour accountants in New St. Andrew's House, and even the loving intentions of Sir Hugh Fraser's fiancée, who has apparently offered her services as a teacher in the new school, cannot make a huge loss break even.
I shall now deal with the value of the college. Last week, the Minister dared to ridicule my valuation of the college at £12 million. He allowed his ridicule to take him into the uncharted territory of offering me the property that he had already sold. Is it unrealistic to value land and first-rate buildings at a mere six times the building cost of 18 years ago? What is the value of 52 acres of prime town centre land alone? Land in Hamilton in the town centre is selling today at £52,000 an acre. The land value, even allowing for demolition of the buildings, is about E2½ million.
It was 18 years ago that Hamilton college of education was built for £2 million. A Public Accounts Committee investigation of that time records the details of the building costs. The £12 million is a conservative valuation for rebuilding, replacement or even alternative use. I challenge this chartered accountant Minister to put a book value of any less on it.
Several local issues arise out of this sordid issue. One is the Holy Cross high school, which is adjacent to Hamilton college of education. It has enjoyed the use of the swimming pool, the gymnasium and other facilities In the college buildings and it is now to be denied them by the new owners of the college. That will create a major accommodation crisis for one of the finest educational establishments in the Lanarkshire area. I know that, when I see the parent teacher association of that school next week, its grievance against the Government will be clear and justified.
This has been a sorry and squalid affair. The Minister owes the House, the people of Hamilton and the taxpayer an explanation for his conduct. We look forward to learning something about the mysterious and sordid way in which he disposes of public assets.
§ The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)
Like the hon. Member for Hamilton (Mr. Robertson) I welcome the opportunity to put on record the circumstances regarding the sale of Hamilton college. 989 The hon. Gentleman has used much emotive language tonight and elsewhere when discussing the case. He talks of a sorry and squalid episode, a jumble sale price and a cover-up, but I assure him that there is absolutely no basis for the type of language that he has been using. There is no cover-up. The hon. Gentleman is looking for a scandal where none exists. He may think that it is good fun or good local politics to do this, but it is not helpful to his constituents or to the House.
The hon. Gentleman has topped up the price to £12 million and has stuck to that figure. At least he is consistent in his exaggeration. There is no foundation for that price. I cannot understand why the hon. Gentleman does not appreciate that the price of any land or building is determined by what people are prepared to pay for it—no more and no less. This is a simple example of offers being made, and of the best offer being accepted. With respect, the scandal and "sorry and squalid episode" to which the hon. Gentleman referred consist in the fact that he has topped up and exaggerated the figure. That is the scandal. That is the irresponsibility of which he accuses the Government.
It may be helpful if I remind the House briefly of the events which led to the sale of the Hamilton buildings to Christian Schools (North West) Limited and to Millers Homes (Northern) Limited. In so doing, I can reply to the hon. Gentleman's points. There was never any intention that the Hamilton property should remain for long in the ownership of Jordanhill college—to which it was transferred on closure—since there was no college of education function for which the Hamilton buildings were required. The regulations that closed Hamilton as a separate college therefore empowered Jordanhill college, in due course, to dispose of the property.
In December last year, the property was advertised publicly as available for disposal after 15 September 1982. Over the next two or three months a substantial number of people—more than 30—expressed some interest in the property. In June, those who had expressed a real interest were invited to submit firm offers to purchase by 23 July. Two of those offers were for the whole property: the offer by Millers related only to the hostel accommodation and the offer by Christian Schools to the teaching block.
At the end of the day the offers by Millers and Christian Schools were accepted. The offers accepted were the best offers received. There has been great talk about disposing of the college at less than its value, but the value of any property is what it will fetch in the market. There was no offer for this property that was more than a small fraction of the £12 million at which the hon. Gentleman estimates the value. The two unsuccessful bids for the property were not accepted, because each was subject to conditions that introduced a high risk that at the end of the day a sale would not have taken place. I emphasise, however, that decisions were reached entirely on commercial grounds. There was no question whatsoever of giving preference to a particular party.
I should stress that Jordanhill college found it expensive to keep the buildings going. At present, the cost is more than £300,000 per annum just for keeping the empty college in existence. That had some bearing on the Government's decision when considering the offers.
§ Mr. Fletcher
It would have cost much more for the college to continue to train teachers, for whom there were no jobs in Scottish schools. I believe that the hon. Gentleman taught economics, and he should not need any further explanation.
The two unsuccessful bidders for the Hamilton property have stated publicly that they offered more than the total price that was eventually accepted, and I confirm that that is so. However, I repeat that each offer was subject to conditions that made it unacceptable. One of the two unsuccesful bidders has declined to discuss the matter further in public, so clearly it would not be right for me to disclose any details of his offer. The other unsuccessful bidder, Hamilton Property Developments Ltd., has, however, made certain statements on which I feel obliged to comment, some of which were repeated by the hon. Gentleman.
Press reports would suggest that this offer was subject only to a condition that the purchasers first obtained outline planning permission to convert the hostels for housing accommodation and to convert the main teaching block for use as a hotel and conference centre, with the implication that none of this would have given rise to any difficulty. In fact, the sale would have been subject to the condition that the hostels be converted for housing and also that Hamilton Property Developments Ltd. should have obtained outline planning permission for three different interchangeable planning consents to convert the main teaching block for use as a hotel and conference centre, as a private clinic or as commercial offices.
The idea was that the prospective purchaser should hold all four of the planning permissions simultaneously and no sale would have taken place unless that were so. It seemed to us that there was a considerable risk that these consents would not have been obtained in this way and that there was an unacceptable risk that a sale would not have taken place. Furthermore, during the time that would have been needed to seek, and perhaps obtain, planning permission, Jordanhill would have had to maintain the property at a cost which would have made the offer by Hamilton Property Developments Limited, even on strictly financial terms, a good deal less attractive in relation to the offers which were eventually accepted. As I said earlier, the cost of maintaining the college in its present condition is more than £300,000 per year.
I understand that Hamilton Property Developments Ltd. has submitted to Jordanhill college's solicitors an offer, received on 22 November, to purchase the Hamilton property for £775,000 without any conditions attached. I am not clear what the purpose of this offer is as the final exchange of missives for the sale of the property took place on 8 November and Jordanhill is not in a position to sell it to someone else.
§ Mr. Fletcher
I was trying to make the hon. Gentleman understand the absurdity of the £12 million on which he insisted when I said at Question Time that even one-quarter of that would have been of great interest to the 991 Government. If the hon. Gentleman is seriously asking why I made that comment, it was simply to show the utter absurdity of the price on which he insisted.
§ Mr. Fletcher
The hon. Gentleman accuses me of being flippant, but he has repeatedly insisted that his valuation of the property is £12 million. Yet the people whose offer he is now defending offered £775,000. I do not recommend that he stretch his absurdity any further than he already has.
§ Mr. Fletcher
Another important point is that, during discussions with Jordanhill at an earlier stage, Hamilton Property Developments Ltd. was asked if it would be prepared to withdraw the conditions that were eventually found to be unacceptable, but it refused to do so. It had the opportunity to reconsider its offer. It was pointed out that the offer as it stood would not be accepted. It was entirely a matter for Hamilton Property Developments Ltd. whether it withdrew the offer with those conditions attached. It has now done so, but unfortunately, from its point of view, it has done so after the offers to which I referred have been accepted.
The hon. Gentleman has also exercised his financial and arithmetical prowess today by doing some sums to satisfy himself that Christian Schools could not operate in the Hamilton area otherwise than at a loss. Again, he must appreciate that questions of viability are entirely a matter for the new proprietors of the school. As I have said, the decision to sell the teaching block and playing fields to Christian Schools was taken entirely on commercial grounds because its offer for that part of the property was the best and was entirely free from conditions, and questions about the future use of the property did not arise.
I stress that my Department had no direct contact with Christian Schools and suggestions that there was an irregular bargain to ensure that the property was used for a private school are unfounded. No special treatment or financial aid has been sought by or offered to the school. In due course, like any other private school, it will have to register with the Registrar of Independent Schools. I cannot anticipate any discussions that may take place at that stage.
The sale does not cast any reflection on the adequacy of the public sector schools in Hamilton provided by Strathclyde regional council. The offer from Christian Schools came out of the blue. It ran two schools in England. I assume that it knows its business and that it has done its sums regarding the viability of the project.
I should like to stress the importance of the savings that will result to the taxpayer as a result of closing Hamilton 992 college. In the evidence I gave to the Select Committee on Scottish Affairs last year, I suggested provisionally that the savings from the closure of the college would be about £250,000 in the first year after closure and about £800,000 a year thereafter. At current prices this amounts to £300,000 in the first year and £1 million in subsequent years. We now expect that savings will amount to more than £500,000 in the current year and well over £1 million next year and in later years.
Those savings would, however, have been significantly reduced if the buildings had been retained for any length of time. This was an important element in the decision to dispose of the buildings at the price which has been realised. That is an important consideration which the Government, with responsibility for taxpayers' money, was obliged to take into account in making a final decision to dispose of the property.
To those who ask if there was a reserve price on the property, I would say that a reserve price was unnecessary. We were under no obligation to accept any of the offers received. As the disposal of the property saved well over £300,000 a year on maintaining the property as it is at present, it was obviously well worth our while to take an offer without conditions that would expedite the sale and the taking over of the premises by the parties concerned.
The Lanarkshire branch of the Educational Institute of Scotland has issued a statement opposing the sale and claiming that the education of children in Lanarkshire has suffered because of the closure of the college. The teachers resource centre located at Hamilton college was run not by the college but by Strathclyde regional council. Complaints that it has not reopened elsewhere should be directed to the regional council and not to me. The continued provision of in-service training for teachers in Lanarkshire is a proper matter of concern to the Secretary of State and myself. I am happy to say that there has been no decline in provision as Jordanhill college has taken over responsibility for in-service training.
§ Mr. Fletcher
There is no decline in the provision of in-service training. That is what matters. In the debates on closure, assurances were sought that in-service training would be maintained at the standard to which the Lanarkshire area had been accustomed. That commitment was given and carried out. There is no justification for the exaggerated and irresponsible remarks that have been made. The House can be satisfied that the Government have acted prudently and properly, in the best interests of the taxpayer.
§ Question put and agreed to.
§ Adjourned accordingly at thirteen minutes past Two o' clock.