Portsmouth City Council leader defends plans to buy St James' HospitalÂ

Earlier this month leader Cllr Gerald Vernon-Jackson revealed his intention to buy the Milton site to protect it from developers.

He was keen to see the land used for affordable housing and services such as a dementia care centre while making a profit for the council.

'The council should be about providing services and exists for the benefit of local residents and sometimes we have to do things when we deal with a bit of a loss,' he said.

'For private developers the profit margin for something like this is £10m. The council doesn't have to make profit in the same way as a developer. And I think one of the things that has gone wrong in the last few years is we have thought about the council being a public limited company just looking at profit and loss.

'We could use the land in a way private developers wouldn't. For example, a dementia village is not something the private sector is interested in but we could do it.

'It's also about reusing the original buildings in an imaginative way. And we would look at trying to make sure there is a maximum amount of affordable housing. The government rules on this are really really relaxed which is why a lot of developers get away without having to provide affordable housing.'

However, Tory Cllr Luke Stubbs was not convinced this would be possible. He said: 'Cllr Gerald Vernon-Jackson is saying he can make a profit buying St James' Hospital.

'When City and Country bought Kingston Prison as part of a deal with other prisons they realised they couldn't make a profit out of it. Gerald is talking about buying St James', converting it and still making a profit. I don't think it can't be done, especially if City and Country can't make the prison work. We've got to be really careful about getting excited about this and running away with ourselves.'

The former leader of the council, Cllr Donna Jones, agreed. She said: 'St James' Hospital is a complicated site. The gas bill alone on the old hospital is in excess of £400,000 a year. The leader of the council is proposing to compete with the private sector to buy the site, and then not develop it to its full potential, but instead pay top value to effectively leave large swathes of it as grass. Is this is a good use of public money?

'What the Liberal Democrats should be doing is working with the private sector to make sure who ever buys the site ensures the development is kept to a minimum, that its infrastructure is improved to support increased traffic movements and instead spend the money on improving the local schools and educational offering which will need boosting when homes are built there.'

The council's housing boss, Cllr Darren Sanders, defended Cllr Vernon-Jackson's plans. He added: 'Of course we can make a profit on it.

'˜But the main thing is that we make sure we do it right and make sure the offer we make is correct.

'The local residents have been frustrated for four years because the previous council just seemed to shrug its shoulders. I have faith we will do it. We need to be ambitious and do the right thing for the city.'

It is thought that around 300 homes could be located at the site, which is currently owned by NHS Property Services, plus a 70-bed care home.