London borough nets £186m from sale of wholly-owned company

Merton Council has said it is in a "strong position" after selling a wholly-owned subsidiary for £186m.

The London borough said the sale of its professional services company, CHAS 2013 Ltd, to a US firm would help pay down its debt and protect against “cuts from Westminster to council services”.

CHAS supported the construction sector with safety accreditation and grew to become an international firm.

As a capital receipt, the money cannot be used for the annual cost of providing services. The council can only use the money for one-off investments and capital projects, such as building new infrastructure in the borough.

Merton plans to use £50m to pay off half of its debt, mainly in paying off Government loans – which all councils can use to deliver major projects. This will free up money to spend on maintaining and improving local services for residents, it stated.

A "significant sum" will be invested into Government-backed investment schemes – ensuring low-risk investment for residents that will generate another annual income stream, the council said.

Around £75m will be earmarked for major new projects in the borough, including building the first council homes in a generation and new sporting and leisure facilities.

Council Leader Ross Garrod said: "This capital injection is great news for residents – putting the council in a strong position to deliver on our ambitions to build a better Merton, together.

"With government funding cuts now an annual event, it is more important than ever that we spend this money wisely – especially as it can only be spent once.

"That's why we are prioritising paying down debt and making sound investments which will help us save money and generate income to reduce the impact of cuts from Westminster to council services."

Adam Carey