LABOUR controlled Warrington Borough Council has defended a loan facility of more than £200m to The Hut Group (THG) owned by billionaire Tory party donor Matthew Moulding.
While opposition Tory Cllr Mark Jervis, who sits on the council’s corporate Governance Committtee has accused the council of “lack of openness” following a behind closed doors Cabinet meeting last year approving the £202m loan facility, the council says the loan will help secure good quality local jobs with one of the town’s largest employers.
Lib Dem finance spokesperson Cllr Ian Marks, a former leader of the council, has also expressed serious concerns over the “strange investment.”
As reported by the Financial Times THG received a loan of more than £150m from the borough council to buy up a number of the firm’s properties ahead of its float on the London Stock Exchange.
The borough council advanced £151m of a £202m facility to an investment company called Icon 3 Holdco, which is indirectly controlled by Matthew Moulding, according to a report prepared for the authority’s audit and corporate governance committee in July – a figure more than five times the size of any of the council’s other commercial loans.
The loan was approved by the council’s cabinet sitting in private session in October 2020.
It has been described as “one of the largest council loans on record”, from which it has taken three drawdowns totalling more than £151m.
Warrington council’s official documents, prepared last month, revealed the sum was more than 10 times the average loan taken by other local companies, and was paid to a company called Icon 3 Holdco, which is indirectly controlled by Moulding.
Council loans and investments have come under intense scrutiny in recent years amid deteriorating finances.
The entrepreneur and former Conservative party donor, who grew up in a house near Burnley has amassed an estimated personal paper fortune of £1.9bn through his 25% stake in THG.
Cllr Mark Jervis, Conservative Member of the Audit and Corporate Governance Committee on Warrington Borough Council said: “This new Loan Facility of £202M, of which some £151M appears to have been advanced, is further stark evidence that Warrington Borough Council’s Labour leadership are no longer focussed on their role to provide local community services but are instead offering multi-million-pound loan facilities.
The failure to secure sign off of the Council accounts since 2017/18 and concerns over investments such as Redwood Bank and Together Energy calls into question the Labour Council’s expertise in this area.
“There is a lack of openness from Labour with this deal appearing to have been approved by The Labour Cabinet behind closed doors in late 2020.
“No details on the terms of the deal have been released and there is therefore no evidence to determine whether the loan has supported new jobs in Warrington.
“Labour are using public money to do commercial deals. It is not open and transparent and the risks to Warrington’s residents are completely unknown.”
The Hut Group
Picture THG
“This company is owned by a very successful billionaire and it just doesn’t feel right, a Labour council loaning money to a major Tory party donor.
“While this loan may be less risky than some of the others like the one in Together Energy, it just doesn’t feel right to be loaning huge sums of money to a very successful company. This is the kind of commercial investment you would expect a bank to be making – not a local authority.
“This is an awful lot of money for not a lot of jobs in comparison.
“At a time when we still haven’t had the council accounts signed off from three years ago this is damaging the reputation of the council and the town.”
A Warrington Borough Council spokesperson said: “Our objective is to secure good quality jobs for local residents and to support the local economy.
“This arrangement is secured against assets and The Hut Group, as one of Warrington’s largest employers, has brought in a significant number of jobs locally.”
7 Comments
Have I got this right? WBC did this deal over a year ago? And we knew nothing about it until it was revealed in the Financial Times?
That suggests an alarming lack of oversight.
This spirit of adventure needs to stop. The people who are at risk – ordinary citizens – currently have no way of intervening. Cllr Bowden – please, please press the pause button.
The sooner our previous electoral system, with half the council being re-elected every two years, returns the better. That arrangement would at least afford voters a degree of control over the make up and hence the actions of the council. Whereas the present arrangement, ironically sold to us on the grounds it would save money, gives free rein for our politicians to engage covertly in all sorts of madcap schemes, putting us at risk but powerless to prevent. Regrettably the current administration’s investment, bond and loan extravaganza has all the hallmarks and desperation of gamblers wanting just another throw of the dice to make good his losses. A report in today’s Times states WBC presently has “net assets of £128 million – according to its financial accounts.” Are these the accounts that haven’t been signed off for the last three years, all the while our indebtedness creeps – and occasionally lunges – forward towards £1.6 billion?
I would agree with a move to more frequent elections. Yes, there’s a price to be paid, but there’s also a democratic price to be paid for ineffective scrutiny, which is what we currently have.
Apart from the questionable investments and undisclosed (to the electorate) loans, they are also spending sizeable sums (£180,000) with Link Asset Services and a clutch of others (at £6000 to £50,000 a time) totalling £210,000 approx on “governance review audit skills, bonds, loan documents, review of Redwood etc.” This is way over the alleged ‘excessive costs’ of holding elections as we previously held them before they decided to ‘save money.’
I suggest the Labour controlled council finally admit their problem and contact https://www.gamblersanonymous.org.uk/ where they can start to receive the help they need.
The problem is business is run on debt these days and the assets of the owners protected holding companies etc. This person is extremely rich and should be supporting his own company. It really is about time this council started supporting its own residents.
I might have missed it, but does anyone know how many jobs this has actually created? ANd how many are quality, high paying jobs? It would be interesting then to see how much each job has cost. However, I’m not sure how supporting a billionaire instead of a fair trading local company makes sense in terms of Labour’s vision as being the party for the common working person. How many local start ups could £202m have supported? Still, it’s a loan so at what rate and when will it be returned?