A MAJOR loan deal between the council and a housing provider has sparked a political row.
The cabinet of labour-led Warrington Borough Council approved plans for the council to enter into two loan facilities with Auxesia Homes Ltd at its meeting on Monday.
It will see the council enter into a three-year £30m term loan facility and a two-and-a-half-year £7.5m revolving credit facility with the housing provider.
Deputy head of council Cllr Cathy Mitchell, Labor, said the investment had undergone a thorough due diligence process carried out by independent experts – and insists it is “not not a blank cheque”.
She said: “This is an investment in affordable housing, which is very scarce in the area.
“It’s fully secured by the existing property, which means if our loan isn’t paid off in full, we become owners of those homes, much like a mortgage.
“Auxesia Home is registered with the social housing regulator and puts armed forces veterans, NHS workers and other emergency service personnel at the top of the list for its affordable properties.
“We know that some people reflexively oppose every investment made by the council.
“However, after a decade of austerity and with Warrington as the sixth least funded local authority in England, we have no choice but to develop alternative sources of revenue.
“The alternative is further cuts across the board as the returns on our investments help run day-to-day services.
“If the Conservative Opposition didn’t make a completely secure investment in affordable local housing, what kind of investment would they make exactly?
“And if they preferred that we not invest at all, which municipal services would they make us cut first?”
But the move was criticized by the city’s conservatives, the council’s opposition group.
Cllr Ken Critchley, Conservator, said: ‘It is not an insignificant sum that is potentially on loan to Auxesia Homes Ltd.
“This is a council that has already borrowed over £1.6bn. This is an astronomical amount of debt for a council with just £135m of usable reserves.
“This debt is at a staggering multiple of about 12 times the usable reserves of the board. Any increase in this gear level is extremely concerning.
“Another concern is that the loan facilities agreed by the cabinet have not been subject to careful scrutiny by the full board.
“Many members may have a very different idea of what constitutes a prudent investment. During the first part of the cabinet meeting itself, not a single question was asked by cabinet members regarding these proposed loan facilities.
“Such a lack of control only increases the risk of groupthink bias and optimism.
“We non-board members have had no view or input into the due diligence undertaken in relation to Auxesia homes Ltd or its shareholders.”