Fire sale fears as Suffolk County Council's leader says he has 'no interest in handing down anything to the new unitaries'

Local Government Chronicle (LGC) reported on Tuesday, 4 August, that it had obtained a recording of a closed Reform UK meeting held during last month's Local Government Association (LGA) conference, at which Suffolk County Council leader Cllr Michael Hadwen discussed how the county was preparing for local government reorganisation (LGR).

According to LGC, Cllr Hadwen told the meeting he was "in the throes of looking at options now", and that "one thing we are looking at" was the divestment of council companies.

"We have no interest in handing down anything to the new unitaries, other than what we statutorily have to give them," LGC reported him as saying. He went on: "We have some wholly owned companies that I'm looking to release into the market, basically to give off everything we can, because other than what we need to give the unitaries, I don't want to give them anything extra, because they're going to collapse financially immediately."

No LGC journalist was present at the meeting. In a further comment provided to LGC, Cllr Hadwen said he had been recorded by "a journalist, hiding behind a curtain… to make a name for themselves," adding that he made "no apology" for the private conversation, and that council leaders "from all parties" would be having similar discussions.

What is actually at stake

Under the government's LGR proposals, Suffolk's county and district councils will be replaced by three unitary authorities from April 2028. Suffolk County Council's previous administration opposed this model, favouring a single unitary authority, and its new administration is separately pursuing a judicial review against the government over the decision.

Suffolk County Council owns three companies through its wholly owned holding company, Suffolk Group Holdings Ltd: Vertas Group Ltd, which provides grounds maintenance, catering, caretaking, facilities management and print and design services; Concertus Design and Property Consultants Ltd, which provides architecture, estate management and project management services; and Opus People Solutions Ltd, a recruitment and staffing specialist.

According to the council's latest published accounts, it spent more than £36 million with the three companies combined in 2024-25 – £22.2 million with Vertas, £7.5 million with Concertus and £6.4 million with Opus. Vertas is also one of Suffolk's largest employers, employing more than 5,000 people delivering services relied upon across the county.

The legal bar for divestment

Any decision to sell or wind down these companies would not be straightforward. Under section 3 of the Local Government Act 1999, councils are under a statutory duty to secure "best value" in the management of public funds, meaning any sale of commercial assets would need to be shown to maximise financial returns or deliver clear, justifiable benefits.

Councils also owe a fiduciary duty to local taxpayers, and a divestment plan driven by political considerations rather than financial justification could leave a council open to legal challenge if it resulted in an unjustifiable loss of public funds.

Major decisions of this kind are also typically classed as "reserved matters" in a company's articles of association or shareholder agreement, meaning they would usually require formal approval by the council's cabinet or full council, rather than being taken unilaterally. Cllr Richard Rout, leader of the Conservative group, told Ipswich.co.uk it was "a matter for the council's constitution whether these issues have to come before full council". He said: "My reading is that it would likely be a Cabinet decision. However, given the gravity of such a decision and the wide-ranging implications for local government reorganisation in Suffolk, a full council debate and vote would be the correct thing to do."

There is a further complication. Many wholly owned council companies rely on the "Teckal exemption", which allows a council to award them contracts directly, without a competitive tender, because they are under its full control. Selling even a minority stake to a private buyer would break that exemption, forcing any future contracts with the company out to open market competition.

'Not fit to run this council'

The Green group, the official opposition at Suffolk County Council, reacted with alarm to the reports. Speaking to Ipswich.co.uk, group leader Cllr Andrew Stringer said: "If these reports are true, we consider that Michael Hadwen and the Reform administration are not fit to run this council. This approach would be very immature and short-sighted."

Cllr Stringer said the other councils involved in reorganisation were "putting resources into the process in good faith" because it was in residents' best interests for the new unitary councils to start on "as strong a footing as possible" in April 2028. He said Reform UK was entitled to its opinion that the unitaries would struggle financially, but added: "It is very different to deliberately conspire to bring about the future downfall of the new councils financially in advance. This approach would actively harm Suffolk and the people who live here."

He said the reports suggested Reform was "yet again considering how they can antagonise the government and frustrate their plans for council reorganisation, without giving much thought to the negative impact that would have on the people they have a duty to represent."

'Asset stripping Suffolk's future'

Cllr Rout was equally scathing. "These companies were built over a decade with public money, employ thousands of people, clean our schools and feed school children," he told Ipswich.co.uk. "They don't belong to Councillor Hadwen, they belong to Suffolk taxpayers. Selling them off now could be seen as asset stripping Suffolk's future and a deliberate act to undermine the new unitary councils."

He suggested Suffolk's district and borough councils might now seek government intervention. "If they haven't done so already, I'm sure, in the light of these rash comments, the district and borough councils will be writing to the Secretary of State and asking for Section 24 of the Local Government and Public Involvement in Health Act 2007 to be invoked, which imposes financial controls on councils due to be abolished – particularly around the disposal of valuable assets," he said. "This provision was designed specifically to stop councils acting irresponsibly and seeking to undermine successor authorities."

Cllr Rout also questioned the financial logic of a sale. "Disposal of the council's wholly owned companies, either through a management buyout or sale to the market, would provide an injection of cash – which Reform UK would no doubt dress up as a win," he said. "Elements of the businesses could be disposed of without adversely impacting the council's operations and finances. However, those are also the least marketable elements. Disposing of those that would draw interest would likely damage the long-term viability of local authorities in Suffolk."

He pointed to Vertas as an example. "Companies like Vertas, for example, are often the supplier of last resort to the council and, in areas like providing school meals to some remote primary schools, do so on terms no other company would accept," he said. "No commercial provider would pick that contract up at the same value and the county council would be left picking up the tab. This is just one example, and the 'virtual dividend' of these companies, which doesn't appear on a balance sheet, shouldn't be underestimated."

Hadwen's response

Approached for comment, Cllr Hadwen said: "As Local Government Reorganisation comes under my portfolio, it would be madness for me not to consider every option to protect the best interests of Suffolk.

"But let me be clear – no decisions have been made, and I have not instructed officers on this matter. However, I will be exploring options on a range of different approaches.

"All of this work is to make sure we are best able to work with the other Suffolk councils should LGR go ahead."

A pattern of resistance to scrutiny

The reports come amid wider concerns from opposition councillors about how the Reform administration has handled decision-making on reorganisation. Suffolk County Council recently rejected four separate challenges from opposition groups over how it decided to pursue its judicial review against the government, and has declined to publish the reasoning behind that rejection or comment further.

Cllr Rout has previously described the council's refusal to share that reasoning as "frankly disgraceful", while Cllr Martin Cook, leader of the Labour group, has questioned whether residents can have "any assurance that the decision was made completely lawfully" while the report remains hidden. Cllr Stringer has also raised concerns about the administration's approach to transparency more broadly.

Cllr Rout said the wider financial backdrop to reorganisation made the timing of any divestment more difficult to justify. "The Government's decision to opt for three unitary councils for Suffolk, rather than just one, will put them in a precarious financial position from day one, particularly the new Greater Ipswich council," he said. "So, things will not be easy for local government in Suffolk. That being said, just because the Government has dealt Suffolk a bad hand, that doesn't mean Suffolk County Council should proactively seek to make it worse. We may not like the decision, but the right thing to do is to try to make a success of it, despite the financial backdrop."

He added: "This is all seemingly part of a pattern of behaviour of decisions being made behind closed doors by one man. I don't believe everyone in his group would seek to proactively undermine Suffolk's future in this way, and I hope they can help him see sense. Leadership is something to be used responsibly."

It was a sentiment shared by Labour leader Martin Cook, who said: “What Cllr Hadwen calls ‘releasing into the market’ looks like a fire sale of things Suffolk taxpayers built and own, explored in a closed party meeting, with not one word to opposition councillors. In private, it’s scorched earth: ‘no interest in handing down anything’ to Suffolk’s next councils. In public, he talks of working constructively with the other Suffolk councils. Both cannot be true.

"The Leader can settle what this is really about in one sentence: publish what would be sold, and where every pound would go. Any disposal must come to Cabinet, in public, with a full business case, under the council’s constitution. This cannot be another individual executive decision that residents learn about after it’s done."

He called on Cllr Hadwen to "reassure these companies’ staff today" and said that "if any step is taken towards a sale, Labour will refer it to Scrutiny immediately.”

The bottom line

Cllr Hadwen insists no decisions have been taken on divesting Suffolk County Council's wholly owned companies, and that he is simply exploring the council's options ahead of reorganisation. But the mere prospect, and his choice of language, have drawn sharp criticism from Suffolk's opposition groups, who argue that stripping the county of valuable, income-generating assets before the new unitary authorities take over would harm the very residents those councils are meant to serve.

Any such move would also have to clear a demanding legal bar – best value, fiduciary duty to taxpayers, and formal governance approval among them – designed precisely to stop councils giving away public assets without proper justification. Whether Suffolk's Reform administration ultimately tests that bar remains to be seen.

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