GRAVE concerns have again been raised over Warrington Borough Council’s £32 investment in Redwood Bank and its holding company.
At the full council meeting on Monday, Cllr Ken Critchley (Con) questioned Cllr Cathy Mitchell (Lab) over the recent financial restructuring of Redwood Bank and Redwood financial partners Ltd its holding company.
The financial restructuring was reportedly required to, ensure the bank was sufficiently capitalised in order that it is able to meet the difficult challenges that have been presented by COVID-19, as well as being able to meet its regulatory requirements.
Cllr Mitchell confirmed that the council had invested a further £2 million on top of the £30 million already invested, bringing the total invested by the council to £32 million.
In her answer to Cllr Critchley’s follow-up question Councillor Mitchell was unable to give a date when the council expect to receive a dividend from this investment.
The Conservative opposition group say they remain gravely concerned about the council’s £32 million of investment in Redwood financial partners Ltd, given the lack of any financial returns to date and the council incurring in the region of
£750,000 per annum in interest costs to service this investment.
Cllr Ken Critchley
Councillor Mitchell is unable to provide an indication of when a dividend will be received.”
Cllr Mitchell said: “We continue to be pleased with the bank’s performance.
“It is worth remembering that the bank originated from a cross-party policy committee, as a route to support local SMEs.
“It is also important to note that the bank wasn’t primarily established to drive income for the council, but to drive economic development.
“To date, the bank has lent more than £100m to North West businesses, helping to support economic growth locally and in Warrington.”
Cllr Cathy Mitchell
2 Comments
Given the participants in the original approval it’s unlikely the LD’s will side with the Tories concerns. Surely this has to attract serious interest from a higher level. In any commercial business this type of apparently flawed activity would surely result in sackings and investigations. I wouldn’t trust them with my kids pocket money!
Bill Roberts
What about the other £1468m – £1998m of projected investments?
The Tories Redwood obsession, driven by Facebook accountants, is strange given that the Redwood investment was made as a shortcut to achieving the local lending benefits of a Community Bank and constitutes less than 2% of the Council’s investments.
The shortcut was offered by David “Spotty” Rowland a donor of £2.8 million to the Conservative Party, a former Conservative Party Treasurer, and a sometime Tax Exile in various Tax Havens including Guernsey.
If the people of Warrington are being shortchanged on this “investment” It is down to the naivety of the Labour Administration, exploited by a former Tory grandee.
If, on the other hand, the investment is bringing benefits that justify its size, Cathy Mitchell and Russ Bowden must make a better job of explaining and quantifying them.
For the record, I was on the Committee that recommended that the Council explore establishing a Community Bank, similar to other successful ventures of this sort by Councils Like Cambridge.
The Liberal Democrat group did not support the Redwood investment, nor did we feel that it would be the equivalent of the Community Bank we wanted.
So Tories complain that another Tory Grandee is cheating Warrington!
What the Tories do not do is answer the questions.
How would you fill the £20m annual gap in Council Funding that is met by investment income?
Do you accept that the existing value of the investments held is larger than the borrowing, so the Council has a positive balance sheet?
Instead they obsess about a possibly unwise use of less than 2% of the Council’s borrowing.
Given their government’s fiscal incontinence at the moment, such criticisms from the Tories are hypocritical, disingenuous and possibly ill-founded.
They should be ashamed of themselves, though the party seems to have lost any sense of shame it may ever have had.