MP’s concern over council’s “bizarre” lending policy

WARRINGTON North MP Helen Jones says she is concerned that the borough council is providing loan facilities or investing in organisations without insisting there is a benefit to Warrington.
She describes the situation as “bizarre” – but the borough council insists it is all part of a very successful “Invest to Save” programme.
Ms Jones said: “I understand from correspondence with the council that there is currently a sum of £430m allocated for loans to housing associations, of which £82m has been drawn down. Yet there is no requirement for the associations to build houses in Warrington.
“ Indeed, I have been told that the council has taken a decision not to try to identify which properties are being built with these loan facilities.
“The council has given an estimate of 632 houses to be built in Warrington and the surrounding area over ten years. Not only does this go nowhere near meeting the need for social rented housing in the borough but there seems to be no way of tracking how many are being built in Warrington itself.
“I have also asked whether the council’s involvement in the Redwood Bank is conditional on loans being made to small and medium sized businesses in Warrington.
“It is not, despite the fact that I am told that the decision was taken “in recognition” that the strong growth of Warrington SMEs was being hampered by lack of access to finance.
“This seems bizarre. Councils are not banks and if they are lending money they need to ensure it is for the good of the borough.
“ People raised concerns about the lack of social housing with me during my mobile surgery on Saturday and other constituents have been in tears at my surgeries because they cannot get re-housed.  Surely, it would not be unreasonable to ensure that homes get built in Warrington as a condition of these loans and investments or that local businesses get support to expand. All I can assume is that the local finance officers are being outgunned by people with much more expertise than they have.”
The MP’s comments come at a time when the council has experienced cuts of more than £113 million and must save another £30 million over the next four years.
Its “invest to save” programme has been praised as an imaginative move towards the authority become more self-financing.
Warrington has been lending to housing associations since 2010 and there have been no defaults to date. If there was, the council could seek possession of the property.
Purchases of property in the borough will, the council says, result in income that can be used to provide local services and offset the cuts.
The investment in Redwood Bank is expected to provide finance to  North West businesses during its first three years that will exceed the council’s total investment. Investment in solar energy will produce a return of £1 million in the first year and generate more than £5 million to support local services over the next four years.
The council maintains that although not all the investments are within the borough, they will all benefit the borough.
All investments by the council follow a thorough “due diligence” process that involves the use of expert commercial advisors and they are also subject to external audit review, the council points out.