Rental income above a £1.3 million annual target should be reinvested back into Powys County Council’s farm estate, senior councillors have said.

But councillors have been warned that this could see money taken away from services that the county council is legally obliged to provide, such as schools and social services.

At a meeting of Powys County Council’s Economy, Residents and Communities scrutiny committee on Wednesday, June 10, councillors debated the new draft Rural Estates policy for the council.

Powys has the biggest rural farm estate in Wales and the fifth biggest in all of the UK, and how it is run has seen it become a political football in recent years.

The updated policy is supposed to: “establish a clear strategic framework for the council’s farm estate by defining its primary purpose as a long-term public asset that supports entry into farming, sustainable land management, resilient rural communities and wider corporate outcomes, while operating within the council’s approved financial framework.”

One of the innovations in the new policy is that tenancies will be for 15 years rather than the current eight years.

At the meeting, councillors asked whether there is an annual income target for the estate.

They were told that £1.3 million “gross” is made from rent, which ends up becoming around £700,000 “net”.

The £600,000 difference is spent on administering the estate and the £700,000 goes towards the overall council budget pot.

Council leader Cllr Jake Berriman (Liberal Democrat – Llandrindod North) said that the estate is not a “fixed asset” as the target can reduce depending on the buildings and land that may be sold off or moved to become part of other holdings.

Head of planning and regulatory services Gwilym Davies told the committee that anything above the £1.3 million target will be reinvested back in the estate to address the “liabilities” and provide other economic “opportunities” for the council.

Cllr Adrian Jones (Conservative – Berriew and Castle Caereinion) wanted to ensure that the money stays with the farm estate.

Cllr Jones said: “We need to look at that and freeze or reduce it; a fair old chunk comes out of the £1.3 million each year.”

Director of corporate services and s151 officer Jane Thomas said: “If council want to reinvest in the estate that is to be considered as part of the overarching budget plan and be mindful of decisions across the whole council.

“You have to have that broader perspective.”

Committee vice-chairman Cllr Gary Mitchell (Plaid Cymru – Llanbrynmair) said: “We could set a reinvestment percentage.

“Some councils reinvest up to 100 per cent of capital assets in their farm estate so that is within our gift, it’s just we don’t have it within our current budget setting and policies.

“If we review rents each year and we put them up by inflation that additional money can come back in through the estate.”

He put forward a recommendation that cabinet look at allowing this to happen.

Cllr Jones supported this move.

Cllr Berriman wanted to remind councillors of “budget expectations” and that this suggestion should go through the ‘budget advisory group’ in order for it to be put into the budget papers for next year.

Cllr Berriman stressed: “If the members decide that they want to spend it on a non-statutory service and remove money from a statutory service in order to do so, that will be a matter for members at the full council meeting.”

This would be when the budget is set at the end of February or early March.

“Don’t shake your heads,” Cllr Berriman told councillors.

He added that money can only be found for investing in the farm estate if it is taken away from elsewhere.

Recommendations from the committee will be added to the report before it goes in front of the Liberal Democrat/Labour cabinet, probably at their next meeting on June 23.