Council investments “performing well” despite COVID-19 pandemic says deputy leader

WARRINGTON Borough Council’s investments are continuing to perform well, despite the impact of the COVID-19 pandemic, according to deputy leader a finance spokesperson Cllr Cathy Mitchell.

Highlighting the council’s controversial investment in Redwood Bank, which has resulted in the council’s accounts from 2017/18 still not being signed off and the purchase of Birchwood Park which is held in an offshore Trust, Cllr Mitchell says the council’s investments are continuing to perform well.
A further £2m has been invested in Redwood Bank, in which the council has a one third stake, while other shareholders invested a further £4m.

Cllr Mitchell, deputy Leader and Cabinet Member for Finance said: “There could not have been a sterner test of the council’s investment portfolio than the pandemic. Across the board our investments have continued to perform well. This highlights the work of our highly trained and experienced officers, who work tirelessly with external experts to make sure that our investments are all carefully assessed. Our governance systems were recently audited by PWC, an independent external auditor. Their report was incredibly positive and found wide evidence of good practice. We are very careful about the investments we choose; there has been a focus on logisitics and food retail, sectors which have done well during the pandemic. Our investment portfolio generates more than £20m per year to pay for services – that’s the money left over after all of the costs of interest and maintenance of the investment are paid.”
She added: “Councils across the country have lost 60p in the £1 of income since 2010 due to Conservative cuts in government funding for councils. This council has responsibility for adult social care and services for children – which takes up about 2/3 of the budget. The council invests to generate income to keep services going. Regular reports about how our investments are doing are brought to Cabinet.
“Redwood bank has continued to grow strongly and could have a big part to play in the town’s economic recovery. The council recently invested a further £2m and maintained it’s one third share. The other shareholders invested a further £4m. It continues to perform to the business plan. The council purchased a share in the bank in order to assist small and medium sized businesses when banks simply wouldn’t lend to businesses, and entrepreneurs had to take out personal loans or remortgage their home to grow their businesses The bank is located in Warrington at The Base.
“Birchwood Park is a key investment generating around £4-5m per year to pay for services. The council has continued to invest in Birchwood Park and its value has increased – our whole property portfolio has increased in value by almost £14m since March 2020.
“When we purchased Birchwood Park it was already held in an existing Jersey-based offshore trust. These trusts are usually used by businesses to avoid paying corporation tax. The council doesn’t pay corporation tax anyway, as a tax-raising body. HMRC itself holds a number of offshore investment properties.
“If the council were to decide to bring the trust back onshore, it would have to pay Stamp Duty Land Tax of approximately £10m and would be likely to decrease the value of Birchwood Park for when and if we want to sell it.
“Not all investments are done to generate income. All councils have a role in regeneration and Warrington Council has invested in Time Square to regenerate the town centre. We can already see private sector investment in neighbouring properties, creating jobs and making our town family-friendly.
“The new council offices are now located at 1 Time Square, which improves accessibility for the public. From the council’s perspective, relocating the offices has enabled the council to close many existing premises that were expensive to occupy and therefore make a saving. In particular, New Town House/Quattro were becoming increasingly expensive to maintain and provided a very poor standard working environment for our staff. Bringing our staff into the heart of the town also boosts the local economy. So it generates all of these benefits and the council saves money on accommodation.
“The Conservatives made our investments a key part of their campaign during the recent local elections. They told us that they would freeze council tax and would repay the borrowing ie. Sell our investment assets – that would reduce the yearly income by at least £25m. That would have to mean cutting services. I’m sure that the Conservatives will prepare an alternative budget, so that people understand exactly where those cuts would be made.” added Cllr Mitchell.