Spas, bars and luxury hotels: how Britain’s historic buildings are being sold off to the highest bidder

<span>Clockwise from top left: the old War Office in London, now the OWO hotel; the Arcade in Ilkley, West Yorkshire; Sheffield’s old town hall; Admiralty Arch in London, which will open next year as Admiralty Arch Waldorf Astoria.</span><span>Composite: Grain Ltd, Alamy, Getty/Observer Design</span>
Clockwise from top left: the old War Office in London, now the OWO hotel; the Arcade in Ilkley, West Yorkshire; Sheffield’s old town hall; Admiralty Arch in London, which will open next year as Admiralty Arch Waldorf Astoria.Composite: Grain Ltd, Alamy, Getty/Observer Design

Outside the Box is a cafe in the scenic spa town of Ilkley, on the edge of the Yorkshire Dales; a good-natured, relaxing place where you can enjoy a reasonably priced enchilada at the tables that spill out on to the pavement. It’s a social enterprise, dedicated to giving skills and confidence to the people with Down’s syndrome and other learning disabilities who enthusiastically staff it, so as to “release their full potential” and help them lead “more independent and fulfilled lives”. It occupies the Arcade, a glass-roofed, stone-fronted, iron-balustraded Victorian structure that had fallen into disuse until the cafe and its associated administrative rooms moved there in 2019. The building belongs to Bradford council, which recently announced that this and 154 other assets were being considered for sale, in order to plug a gap in the local authority’s finances by raising a hoped-for £60m.

The OWO is a five-star hotel in Whitehall, London, an Edwardian baroque palazzo that was formerly the old War Office – “London’s most storied address”, as the hyperbolic blurb has it. It is run by the Raffles hotel chain, following a six-year “definitive transformation” by the transnational conglomerate Hinduja Group and the investment management firm Onex Holding, for a total project cost of $1.5bn (£1.2bn). Here guests can stay in ornate spaces touched by association with figures such as Winston Churchill, TE Lawrence and Ian Fleming, who all used to work in the building. Prices start at £1,000 a night for rooms and £20,000 a night for “heritage” suites. Or you might buy one of the development’s 85 residences, including a 7,700 sq ft penthouse, for up to £20m.

The OWO, which opened last autumn, is one outcome of an austerity-driven programme to raise money by selling off valuable public buildings. The possible disposal of the Arcade in Ilkley is a current manifestation of the same idea, expanded to local authorities all over the country and their portfolios of generally more modest assets. New policies under consideration by the levelling up secretary, Michael Gove, which would allow sales of “investment properties” to meet budget shortfalls without government approval, are likely to accelerate the scale and rate of prospective disposals by desperate, cash-strapped councils. Matthew Topham of the campaign group We Own It, which opposes privatisation and supports “21st-century public ownership”, says that the effect of these changes “will be like turning the taps on full”.

All councils will go bust over the next two years. It’s just a matter of when

Local Government Association spokesperson

Other examples include Nottingham city council, which declared itself in effect bankrupt last November, and does “not rule out” the sale of the city’s castle – with all its Robin Hood associations – and the astonishing Elizabethan mansion of Wollaton Hall. Municipal Buildings in Dale Street, Liverpool, described by the Victorian Society as a “magnificent community asset”, was sold in 2017 for £10.2m to the Singaporean Fragrance Group, with half the proceeds spent on fixing potholes, and is now a hotel. It’s hard to overstate how radical these changes could be. Almost all of the country’s local cultural infrastructure, which we have taken for granted since Victorian times, is up for grabs.

There are obvious financial questions. Does it make sense to treat asset sales as revenue? What happens when the last possible properties have been flogged off, but vast shortfalls still appear in the balance sheets of local authorities and national government? How do councils replace the revenues they currently earn from at least some of their properties? How likely is it that the public will get the best possible prices from what look like fire sales in distressed circumstances? John Grogan, the Labour former MP for the Ilkley constituency, who is likely to win his seat back in July’s general election, argues that “selling at speed never tends to give best value”. The loss of assets, he says, will “limit the ability of the council to shape and encourage economic regeneration in the future”. Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy, told the Guardian that Gove’s idea would be a “directive to break the rules – an allowance given to break all known usual accounting convention”.

It’s also a cultural and social issue. Does it matter if spaces of national government, and of history and magnificence, are handed over to enjoyment by the rich? Not much, says the former Conservative cabinet minister Oliver Letwin, who spent most of his working life in halls and corridors of power. “Grand and historic doesn’t make any difference to the workings of government,” he says. “In fact they can make them worse. People can quite easily get a grandiose idea of their own significance. If you’re working in a room where Disraeli or Churchill sat, you might make the very grave mistake of thinking you’re as significant as them.” Sometimes, says Simon McDonald, formerly permanent secretary at the Foreign Office, “some buildings need to have a high impact in order to work for the country. They need to look like the serious surroundings of an important player.” He also believes that it’s good if those who work there “understand our history” and “know where we came from”.

And does it matter if more modest items of local history are absorbed into the private sector? Yes, says the director of the Victorian Society, James Hughes. Such buildings are “expressions of enormous local civic pride” that “help bind communities together. You lose an awful lot,” he says, if they’re sold, “while achieving very little. You’re plugging minuscule amounts of gaping holes in public finances.”

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In the early years of David Cameron’s coalition government, an organisation called the Government Property Unit was set up, now the Office of Government Property, which boasts that it has overseen the “collection of over £3bn capital receipts from the sale of surplus land and property”, saved “over £1bn pounds in annual costs”, and reduced by 5% the “average space that a civil servant uses in government offices”. Its plums included opulent monuments from the high imperial age – products of a conscious desire to project British prestige and power.

One was Admiralty Arch, the imposing ceremonial portal that leads from Trafalgar Square to the Mall and Buckingham Palace, commissioned by Edward VII as a memorial to his mother, Queen Victoria. The arch was sold in 2015 for £65.5m to Prime Investors Capital, a business run by the Spanish businessman and self-professed history lover Rafael Serrano, who in 2022 sold it on to the property billionaire Reuben brothers. It is to open as a hotel in 2025, after some delays, with the usual luxury trimmings of spa, underground ballroom, roof terrace and top-of-the-range interior design, as the Admiralty Arch Waldorf Astoria. “How exquisite that sounds,” said a gushing piece in the Tatler. “It will be a love letter, and tribute to, the world.”

Another was the War Office, sold in 2016 for £350m, across Whitehall from Horse Guards Parade – an affair of giant Ionic columns, oversized statuary and deeply scored rustication, flanked by domed towers inspired by the work of Christopher Wren. Its interior contains a grand staircase balustraded in orange and grey marble, veinous as meat on a butcher’s slab, overlooked by a balcony from which Churchill used to make inspirational speeches to the building’s staff. It has been used, as has Admiralty Arch, as a location for James Bond films.

Its six-year renovation, overseen by the architects EPR, with the assistance of 11 different firms of interior designers, in places revs up the splendour, in others domesticates it. An eight-metre-high crystal chandelier, like two vast flower heads placed one above the other, adds yet more magnificence to the grand stair. The Levee Rooms – from where directions were given to army personnel in the field and which still had maps of Iraq on the wall when the Ministry of Defence moved out – an imposing sequence of spaces with oak panelling and pilasters and ornate plaster vaults 10.5 metres off the floor, has become a suite. Its main axis now terminates in an old-school copper bath tub, with other sanitary fittings contained in tall structures that resemble vertically stretched four-poster beds. The hotel celebrates, or trades on, the building’s history, with rooms and suites named after brave spies and soldiers.

Was it really the best possible outcome to make all that magnificence into a glibly branded commodity?

There are rooftop bars and dining rooms with views of Westminster’s pinnacles of power. The complex’s main courtyard contains a shining circular stainless steel restaurant pavilion designed by an alumnus of Zaha Hadid Architects, DaeWha Kang, which, while claiming inspiration from the flower paintings of the nature-loving Georgia O’Keeffe, is finished in the kind of paint they use on Aston Martins. A six-storey basement was hollowed out, the mountainous masonry of the old building propped above it, to house a swimming pool and 600-person ballroom, into which can be driven (as has already happened) a Formula One car.

This opulence, impressive if a touch joyless, is a world away from Bradford’s financial troubles. The council faces a shortfall of £72m this year, which, according to its leader, Susan Hinchcliffe, is because of cuts in government funding – a 60% cut in real terms since 2010, or £350m a year – and escalating costs of children’s and adults’ social care, which now account for 87% of its budget. These are in turn the result of greater demand arising from increasing hardship and the growing costs of privately run care services. The Yorkshire Post reported last November that the council pays £312,000 per child each year for them to stay in privately run care homes. According to the Bradford Children and Families Trust, an independent organisation with government-appointed board and chair, the council needs to spend £250m this year to look after children, which is more than the £233m it received in council tax.

Hence its announcement in February of the assets it is thinking of selling. The council is made of a constellation of towns and rural areas, as well as the city of Bradford itself, and its list is a motley one, spread out among its sprawling domain. It includes farmland, car parks, care homes and office buildings. Some of the properties serve or served civic purposes; some were bought under investment strategies that sought to generate revenue for the council. The handsome Georgian building that was formerly Bingley’s town hall and still contains council offices may, it has been suggested, become a hotel. The Picture House in Keighley, a playful 1913 building that houses an independent cinema, is on the list. So is the 17th-century Old Manor House in Manningham, a Grade II-listed structure acquired by the council in 2020 to save it from terminal decay.

And the list includes Ilkley’s Arcade, home to Outside the Box. The council promises that existing leases will be transferred to new owners, leaving tenants unaffected, but buyers seeking to maximise their returns will surely, in the longer term, be tempted to evict less profitable users.

Compared with the old War Office, these are modest structures. The Arcade looks as if it might fit in the OWO’s ballroom. But according to We Own It’s Matthew Topham, formerly a resident of Ilkley and now of Leeds, they constitute a “joint heritage set of cultural assets that work for us”. A town like Keighley is, he says, “a place like so many that has had its industry stripped away. It has had its heart ripped out, great buildings boarded up, promises of levelling up that never came true.” Those that remain in use “give a community a sense of itself”.

Bradford’s plight is severe, but not fundamentally different from that faced by councils up and down the country. Many are struggling with similar crises arising from the growing cost of their statutory obligations and reduced funding. In some cases, as the government from time to time likes to allege, incompetence might play a part. Bradford, according to Topham, “is a sign of things to come”. What’s happening there “is coming for the vast majority of councils”. “All councils will go bust over the next two years,” said a Local Government Association spokesperson, as quoted by Susan Hinchcliffe, “it’s just a matter of when.”

It would be absurd to say that a council should never sell its property, especially those that were bought as investments in the first place, but it’s clearly not sustainable to finance local government by flogging off its assets. At some point, sooner rather than later, they will run out. In 2014, Northampton borough council (as it was then) controversially sold an ancient Egyptian sculpture in the collection of Northampton Museum for £15.8m, but its successor, West Northamptonshire Council, is currently unable to sign off its accounts in the face of enormous debt. In which case some other way has to be found of paying for councils’ services. Topham favours what he calls “the commonsense approach you get in every other country: devolution of tax-raising powers to local government, and public ownership of public services”.

Meanwhile, little pieces of the nation’s soul will be put up for sale. The case of the old town hall in Sheffield, bought by a private company in 2004 and currently disused and deteriorating, does not inspire confidence in the custodianship of private buyers. You also have to wonder what investors might do in order to wring maximum value from the public assets they acquire, whether it’s a care home or a library or an Elizabethan stately home. The notorious overcharging of privately run hospital car parks gives some idea.

Those grand old ministry buildings have become trophies of the super-rich: Gopi Hinduja and his family, owners of the OWO, are No 1 on the latest Sunday Times rich list; the Reuben brothers and their family, who own the Admiralty Arch, are No 3. You could argue that the War Office building has been restored to a standard and extent that the public sector might never have got round to achieving. It is also slightly more accessible than it was in the past – while it’s not exactly welcoming to the casual nonpaying, not-well-healed visitor, a place that was originally designed as a fortress does at least allow the public inside. But was it really the best possible outcome to make all that magnificence and history into a glibly branded commodity, to convert the memories of heroism and armed conflict into a premium product?

Is there no alternative to making what were impermeable and sometimes run-down government offices into luxury hotels? It’s hard to imagine other major countries being so cavalier with their past. And if the £350m received for the old War Office sounds like a lot, it is nothing compared with the billions spaffed up the wall on dodgy Covid PPE contracts, and Liz Truss’s economic disaster.