May 25 2013 Latest news:
By Matt Gaw
Saturday, March 9, 2013
THE way that £2.2million of public money has been loaned to private businesses will be examined by a council task group.
A report to St Edmundsbury Borough Council’s overview and scrutiny committee revealed that hundreds of thousands of pounds had been paid out to cinemas, leisure centres and golf clubs and not yet been paid back in full.
David Nettleton, who chairs the committee, said: “We are not a bank and members were concerned about these loans given that we were having to face cutbacks in Government funding and a freeze on council tax. Therefore should we be lending out money to other organisations, especially things like a cinema?”
Council documents state that the authority makes loans, which includes a level of interest, to promote economic growth, enhance sports and leisure facilities and promote energy efficiency or environmental improvements at council premises.
Among the loans is £150,000 to Abbeycroft Leisure, to carry out improvements at two council-owned sports centres, repayable over five years.
A total of £120,000 was loaned to City Screen to “help the development” of the Hatter Street cinema, including improvements to the facade, reorganisation of the foyer and improving catering facilities.
Christ Church on Moreton Hall received £55,000 – with £30,000 being pledged in 1994 and a further £25,000 in 1998 – while developers of the Suffolk Business Park, Churchmanor Estates Company, have received £271,393 of a £750,000 loan.
Mr Nettleton said: “As you can see from the report, these loans go back to 1994 and it’s been going on for some time. And of course it doesn’t fit the treasury management criteria, which is before the council lends out money it has to have tight guarantees of the return of the money and what to do if it doesn’t come back. We’re trying to get a policy together.”
Mr Nettleton said he hoped the six members of the task and finish group, of which he is one, will meet with finance officers and the finance director in March ahead of April’s cabinet meeting.
Dave Ray, cabinet member for resources for St Edmundsbury, said there are very few loan requests and they are all assessed to make sure they will help the local community.
He added: “If it passes that test we want to make sure there is adequate security for the loan and also that we get a reasonable return from it. We want to make sure that by using the council tax payers’ money in this way, not only helping the local community but we’re also getting a better return for that money than we would have done otherwise.”