Leaked report reveals risks facing Walsall Council-owned shopping centre

An audit of the Walsall Council-owned Saddlers Centre during the 2019/20 financial year raised a string of fundamental and substantial risks to the authority.

These included a lack of a signed contract between the council and centre managing agent, increasing number of empty shops, rising level of rent owed by tenants and no agreement for facilities management being in place.

Walsall Council said contracts were now in place and the Saddlers remains a key part of future town centre regeneration plans.

The inspection, carried out by external company Mazars, was presented to Audit Committee in March this year behind closed doors but has now been seen by the Local Democracy Reporting Service.

The then Labour-led authority purchased the Saddlers Centre in 2017 for a total cost of £13.8 million, with bosses saying it would generate much needed income as well as be a useful asset for regeneration purposes.

It has now been revealed that the value of the centres has plummeted to £3.9 million.

After regaining power in 2018, the Conservatives – who opposed the initial purchase – have continued to criticise the deal.

But the audit was carried out to review the centre management and look at the adequacy of the internal control measures.

Among the key findings, the report found were:

Avison Young was appointed to take over from Cushman and Wakefield as management agent in April 2019 but no contract was signed at or interim arrangement was in place at the time of the audit.

This meant there was no formal obligation for the contractor to provide the services while the council had no authority to enforce the agreed arrangements.

Arrears for rent and service charges from tenants went from £202,097 in July 2019 to 265,147 in November that year.

The report said Avison Young – which is responsible for collecting the rent and service charges – was still working with the previous agents to get the necessary financial data to pursue the owed money but this had been delayed.

Auditors said the council was unable to confirm what actions were being taken to recover the arrears and if financial information wasn’t reported accurately and in a timely manner, there was a risk the money wouldn’t be retrieved.

No procurement arrangements were in place to ensure facilities management services could be provided for tenants.

The report also said there had been an increase in the number of vacant units in that period, most likely to due to market conditions.

In 2018, the Saddlers Centre was hit by the loss of the Marks and Spencer store and this was followed by TJ Hughes closing two years ago.

In the last year, a number of new businesses have moved in while the TJ Hughes site has become the vaccination centre for Walsall. But last week saw the closure of the Eden’s Weigh ‘zero waste’ shop after just over a year.

A spokesperson for Walsall Council said: “The leaked report was heard in private session because it contained commercially sensitive information. Our relationship with all of our private contractors is based upon mutual trust.

“The contract with our contractor along with terms and conditions have now been agreed and signed.

“The council, through their managing agent, recovers approximately £2 million of income per annum from tenants in Saddlers Centre, being made up of rent, service charges and insurance premiums.

“The increase in arrears referred to amounts to less than three per cent of the total annual sum.

“Levels of arrears have subsequently increased during the course of the global pandemic which has had a significant impact on retail businesses.

“The centre will continue to play an important part in our future plans for Walsall town centre.

“Together with our partners the council is encouraging people back into our town centre.

“The We Are Walsall campaign, which was launched last month, has already delivered an upturn in the number of shoppers and visitors.”

When approached to comment on the report the former Labour deputy leader Lee Jeavons said: “I am pleased that Walsall Conservatives recognise the importance of the Saddlers Centre to the future of the town centre, that is why Walsall Labour made the purchase.

“But, having made such a song and dance about the Saddlers at the time of the purchase one would have thought they would have been all over this like a rash from day one.

“It seems that was not the case, indeed, they appeared to lose track of what was going on and let the management of the centre drift for the best part of a year, perhaps longer.

“Effectively we were paying a company to manage a centre but had no contract by which to hold that company to account.”