(Cabinet Member Key Decision 7 February 2014)

SOMERSET COUNTY COUNCIL NOTIFICATION OF A PROPOSED KEY DECISION TO BE TAKEN BY THE CABINET MEMBER FOR RESOURCES Report title: Proposed disposal of freehold interest in land used for West Somerset Railway Cabinet Member(s): Cllr David Huxtable, Cabinet Member for Resources Author Contact Details: James Stubbs, Head of Property, Business Development 01823 355364 Date of Publication of proposed Key Decision: 30 January 2014 Date proposed Key Decision to be made: 7 February 2014 Date Decision comes into force: 13 February 2014 1. Cabinet Member Decision

It is proposed that the Cabinet Member for Resoures: 1. Approves the disposal of the freehold, subject to the necessary consents and approvals of the Secretary of State, of the land and buildings and the obligations under the statutory Orders at West Somerset Railway. 2. Delegates the due diligence of the disposal(s) to the Director of Business Development in consultation with the Section 151 Officer and Monitoring Officer who will recommend purchaser(s) back to the Cabinet Member for a future decision. 2. Reason for Decision(s) As set out in the attached report. 3. Reason(s) for Urgency (where applicable) Not applicable. 4. Details of any alternative options considered and rejected As set out in the attached report. 5. Any relevant Personal Interest that the Cabinet Member may have under the Councils Code of Conduct for members None declared.

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6.

Details of any conflict(s) of interest declared by a Cabinet Member consulted about the proposals and any dispensation from Chief Executive None declared.

7.

Other background information considered by the Cabinet Member before making this decision As set out in the attached report.

(Cabinet Member Key Decision 7 February 2014)

Officer Report
29 January 2014

Proposed disposal of freehold interest in land used for West Somerset Railway
Cabinet Member(s): Mr D Huxtable - Cabinet Member for Resources Division and Local Member(s): Mike Rigby, Lydeard Christine Lawrence, Dunster Terry Venner, Minehead Hugh Davies, Watchet & Stogursey Lead Officer: James Stubbs, Head of Property, Business Development Author: James Stubbs, Head of Property, Business Development Contact Details: 01823 355364

Report Sign off

Seen by: County Solicitor Monitoring Officer Corporate Finance Human Resources Senior Manager Cabinet Member FP 13/12/08

Name H Clarke Julian Gale K Nacey N/A R Williams Cllr D Huxtable

Date 24 January 2014 24 January 2014 28 January 2014 28 January 2014 24 January 2014

Forward Plan Reference:

Summary:

This report sets out the options available to the Council to hold or dispose of its freehold interest and statutory obligations attached to the Transport and Works Act Order and Light Railway Orders (the Orders) associated with the ownership of the land and buildings at West Somerset Railway.

That the Cabinet Member for Resources: 1. Approves the disposal of the freehold, subject to the necessary consents and approvals of the Secretary of State, of the land and buildings and the obligations under the Orders at West Somerset Railway. Recommendations: 2. Delegates the due diligence of the disposal(s) to the Director of Business Development in consultation with the Section 151 Officer and Monitoring Officer who will recommend purchaser(s) back to the Cabinet Member for a future decision.

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Reasons for Recommendations:

The property is an asset of heritage, economic and social importance to Somerset which needs to be preserved and this would enable to Council to rationalise its property portfolio, reduce costs and liabilities.

Links to Priorities and Impact on Service Plans:

The Council has a priority to rationalise its property portfolio, reducing costs and liabilities.

Consultations undertaken:

Officers, Deputy Leader and Portfolio Member for Resources have met with representatives from the two interested parties i.e. the West Somerset Railway PLC and the West Somerset Railway Association. Officers have consulted with the Office of Rail Regulation and a Member briefing paper was circulated in December 2013.

Financial Implications:

The Councils financial liabilities to the railway are currently mitigated through the lease to West Somerset Railway PLC under the terms of the 1975 Order. In the event that the lease should fail these obligations revert to the Council. A capital receipt could be obtained by selling the Councils freehold interest.

Legal Implications:

The Orders place significant obligation and liabilities upon the Council which compels it to own and run the railway. These obligations are currently discharged through the terms of the lease to WSR PLC and without this lease in place the obligations revert to the Council. The lease is named in the Light Railway Order as the instrument to allow this to happen. To transfer the freehold will require the Orders to be revoked and new Orders made to reflect changes of ownership. Such Orders are made by the Secretary of State for the Department of Transport (was Environment).

HR Implications:

None

Risk Implications:

There are a number of risks, set out below, associated with a freehold sale and transfer of the obligations of the Orders: The potential costs of achieving the changes to the Orders. Any application to create new Orders presents an opportunity for a public inquiry to be instigated, which would have to be concluded prior to a new Order being made. An application for a new Order can only be made by the
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(Cabinet Member Key Decision 7 February 2014)

Other Implications (including due regard implications): Scrutiny comments / recommendation (if any):

owner and can not be undertaken prior to completion of a transfer of the freehold. Orders granting the necessary power to operate the railway have to be in place at all times, to allow the railway to remain open.

An objection to an application to revoke and make a new Order would lead to a public inquiry.

Not applicable.

1.

Background

1.1. The West Somerset Railway line was closed by British Rail in January 1971. In 1973 after continued negotiations, British Rail came to an agreement with WSR PLC and SCC to sell the freehold and the assets to SCC in 1973/4. The statutory powers and obligations were transferred from British Rail to Somerset County Council as approved operator for the West Somerset Railway in the form of a Transport and Works Act Order (TWAO) and Light Railway Orders. The West Somerset Railway was leased by SCC to the West Somerset Railway Plc in 1975 for a period of 20 years, and in 1975 the Council affected a Light Railway Order transfer delegating the powers and obligations (relating only to the railway) to WSR PLC. 1.2. SCC as highways authority is still responsible and accountable for complying with national standards especially safety, for all rail, road and footpath crossings. This responsibility, as well as highways authority and local authority will remain with SCC whoever holds the freehold. The lease to WSR Plc was renewed in 1989 for a period of 99 years. 1.3. To sell its freehold interest or seek any changes to the existing Orders the Council requires the consent of the Secretary of State, who is advised by the Office of Rail Regulation.

2.

Options considered and reasons for rejecting them

2.1. Remain with the status quo The Council has the objective to rationalise its property holdings and to reduce the associated liabilities and costs. To continue to hold the freehold and the obligations under the Orders would mean that the Council would retain these assets and would be in conflict with these objectives. 2.2. Dispose of the freehold and statutory interests This is the recommended option as disposal of these interests would accord with the Council's objective to rationalise its property holdings and to reduce liabilities and costs. To achieve this safely and legally the Council must obtain the consent and approval of the Secretary of State and mitigate the risks set out in this report.

(Cabinet Member Key Decision 7 February 2014)

3.

Consultations undertaken

3.1. Officers, Deputy Leader and Portfolio Member for Resources have met with representatives from the two interested parties i.e. the WSR PLC and the West Somerset Railway Association. Officers have consulted with the Office of Railway Regulation and a Member briefing paper was circulated in December 2013. Councillors Shortland and Rigby have been consulted, as Opposition Members, together with the Chairman of the Scrutiny Committee for Policies and Place on this proposed decision. Local Members, Councillors Rigby, Lawrence, Venner and Davies have also been provided with a consultation copy of this report and no responses have been received. There has been significant Member interest in this matter since it first appeared in the Cabinet Forward Plan on 2 December 2013.

4.

Finance, Legal, HR and Risk Implications

4.1. The land and buildings are subject to a 99 year lease granted to the West Somerset Railway PLC (WSR PLC) for a capital receipt of 210,000 in 1989. The Council owns 500,000 shares in WSR PLC. 4.2. The Council's reversionary freehold interest does have a capital value which could be realised through a disposal. 4.3. The Orders place significant obligation and liabilities upon the Council which compels it own and run the railway. These obligations are currently discharged through the terms of the lease to WSR PLC and without this lease in place the obligations revert to the Council. The lease is named in the Railway Order as the instrument to allow this to happen. 4.4. To transfer the freehold will require the Orders to be revoked and new Orders made to reflect changes of ownership. Such Orders are made by the Secretary of State for the Department of Transport (was Environment).

5.

Other Implications

5.1. There are a number of issues which will need to be addressed and the associated risks mitigated to ensure that any sale or changes to the Orders are undertaken safely and legally. These include ensuring consultation with all parties so that the Council can be confident that there will not be any objections raised should an application be made for the existing Orders to be revoked and replacement Order(s) made. Parties would include the Office of Rail Regulation (ORR), the Department of Transport (Secretary of State) and the Heritage Railway Association (HRA) and where necessary appropriate consents will need to be obtained. If an objection were to be made it could result in a public inquiry and the Council would seek an undertaking from the purchaser to pay all costs incurred in dealing with an inquiry.
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(Cabinet Member Key Decision 7 February 2014)

The WSR PLC hold the statutory powers through the current lease and Orders to operate the railway. The PLC should remain as the operator of the railway but measures will need to be put in place to ensure that there is an appropriate spread of risk between the freehold and leasehold/operations of the railway. This will include ensuring that the safe, legal and efficient operation of the railway is not disrupted, checking that the freeholder has the financial backing to be able to fulfil its obligations, that the purchaser's objectives are to support the West Somerset Railway and ensuring that the operator has appropriate Orders, lease and licences in place. The Council's policy for disposal of community assets provides for a claw-back clause to ensure that a purchaser does not profit from disposing of the asset for a more valuable use. This policy would apply to this disposal. The Council's land holding at the railway is complex and it has not yet been registered with the Land Registry. This will need to be completed before a transaction could be undertaken and the scale of this task should not be under estimated. 5.2 Next Steps Should the decision be made to dispose of the freehold and statutory obligations in the railway the Council will continue dialogue with the interested parties to develop proposal(s) to meet the criteria and mitigate the risks set out in this report. Officer will make a further recommendation to the Portfolio Member for Resources on the detailed options once they have been developed.

6.

Background Papers

6.1. none Notes for report authors: Decision-makers must have regard to officer advice before exercising delegated powers (which is why officer reports are completed), and report authors must follow the procedures for taking key decisions as set out in the guidance notes available on the intranet. Only proposed key decisions to be taken individually by the Leader or a Cabinet Member should be set out on this report template. Any local county councillor for any electoral division significantly affected by this proposed decision should be consulted prior to the decision meeting and informed of any subsequent decision taken. The final signed off version of the report (along with background papers and appendices where relevant) should be sent to Julia Netherton in the Community Governance Group at least 7 working days prior to the decision meeting date. All key decision reports have to be published by the Community Governance Group onto the Councils website 5 working days before the decision is to be made, and circulated to all members via email.

(Cabinet Member Key Decision 7 February 2014)

From the point of publication, representations regarding the proposed decision (from members or members of the public) can be made to the decision maker and / or the report author in the 5 working days before the decision is made. You will be sent a template and instructions by the Community Governance Group for logging any representations you may receive after your report has been published. The Community Governance Group will bring all relevant paperwork to the decision meeting and need to be informed of the time / date / venue so they can be present. Report authors should bring any background information on the decision in case the decision maker has any queries. Once the decision meeting has taken place and the Leader / Cabinet Member has agreed to the recommendations, Community Governance will publish the final decision record to the County Council website and notify all members. This happens within 2 working days of the decision meeting date. The 3 working days you have to wait until your decision can be implemented only begins once this notification has been published. All key decisions are subject to call-in for consideration by the relevant Scrutiny Committee within 3 working days of the publication of decisions. Each call-in must specify what is being called-in, why it is being called-in, what information is required to help the relevant Scrutiny Committee consider the call-in, if the implementation of the decision should be delayed until the scrutiny process is complete, and the preferred outcome. The only exception to this rule shall be urgent decisions requiring immediate implementation see urgency provision below. Urgency can only be applied where delay in implementing a decision would be to the detriment of the interests of the Council. The case for urgency must be agreed by the Leader (or Deputy Leader in the absence of the Leader) and the Chairman of the relevant Scrutiny Committee prior to the decision being implemented. Refer to the guidance on writing reports for decision meetings for more information on this. All proposed decisions and supporting material shall be available for public inspection at any time (unless the report contains exempt information under Schedule 12A of Local Government Act 1972).