Decision to rent warehouses to store NHS equipment for 20 years labelled “odd” by Glasgow councillors

An Equipu store — used to hold items for disabled people on behalf of the city’s health and social care partnership — has been based at Baillieston Distribution Centre since 2002.

Members of the contract’s and property committee have questioned why Glasgow City Council has not built its own storage facility to avoid paying out annually to a private firm, the Jersey-based Rockspring UK Value 2 Caisson Ltd.

However, they agreed to extend the lease for another five years due to “time constraints” and “limited” or “more expensive” alternatives due to the Covid-19 pandemic.

A review of council depots is under way and officers are looking into building a new store.

Cllr Ruairi Kelly, SNP, said: “I know the time constraints have left us with very little other option but to continue this contract, but we have a contract we initially entered into in 2002 for a facility that I would assume we knew we were going to need indefinitely.

“In 2002, there was a lot of capital money going around the council, back in the golden era of local government.

“It strikes me as odd that we entered into a contract for indefinite storage of equipment when we could have built a purpose built facility, with the mortgage payments being probably less than what we’re paying in rent.”

He added extra space in the warehouse could have been rented out to pay off some of the initial investment. “It seems that there has not been enough foresight or planning across departments in the past.”

Under the new agreement, the rent will rise by more than £38,000 per year, with the council paying out £138,780 annually.

The Equipu service is responsible for providing, delivering and installing a range of disability equipment, supplied by health and social work services to disabled people living at home, and the units are used to clean, repair and store returned equipment.

A council officer said the new deal reflected the “prevailing market conditions for warehouse property in Glasgow at the current time” and the service has been “extremely valuable”.

He added the council’s “default position” was to accommodate services in its own property portfolio and officers have recently had a “good track record” of exiting commercial leases to relocate in Glasgow’s own estate.

Cllr Jim Kavanagh, Labour, said: “We could have bought these sheds and made them of gold by the time we’ve paid all this rent for them.”

He asked whether an early termination agreement would be included in the lease, but the council officer said a break clause would be likely to cause the annual rent to increase.

“We might need to pay a premium to put an early exit clause in there,” he said, adding that the five-year period could be required if a new facility is to be designed and delivered.

Cllr Ken Andrew, SNP, said the Equipu store had been part of Cordia, an arms-length organisation which delivered services on behalf of the council.

“While clearly Cordia was wholly owned by Glasgow City Council, it certainly operated as a standalone body and made its own contracts,” he said.

“This isn’t just simply a warehousing facility, Equipu provides equipment to substantially disabled individuals. Equipu works very well and does incredibly well in terms of recycling equipment.”