Council’s “secret” £11.5 million loan deal in the balance

A CHALLENGE by an all-party group of councillors at Warrington to a “secret” plan for the borough council to loan £11.5 million to Warrington Collegiate has been adjourned.
Members of the council’s scrutiny committee were due to consider a “call in” by former Labour education chief Cllr Colin Froggatt (pictured), backed by Labour, Liberal Democrat and Conservative councillors.
But the meeting could not go ahead because Cllr Froggatt was not able to attend, due to a prior engagement.
A meeting of the council’s executive board to consider the scrutiny committee’s deliberations is due to take place on Thursday because the college, which needs the money to refinance an existing bank loan, requires to know if the money is available by the end of July.
After the meeting, Cllr Paul Kennedy  leader of the Conservative group, said: “I don’t see how the executive board can reach any decision when the scrutiny committee has still not been able to consider the call-in.”  It had been known before the date of the meeting was fixed that Cllr Froggatt could not be present, he said.
The executive board agreed to loan the money over a period of 10 years at a behind-closed-doors meeting on July 13.
But their decision was subsequently called-in by Cllr Froggatt, with support from Cllr Bob Barr (Lib Dem) Cllr Kennedy (Conservative) and Labour councillors Paul Bretherton, Graham Friend, Chris Vobe and Matt Smith.
Reasons for calling-in the executive decision included a lack of openness, a lack of consultation, a lack of clarity and a lack of consideration of possible risk.
There was also no reference to the loan in the council’s capital programme and Cllr Froggatt said he believed it to be outside the budget and/or the policy planning framework.
Councillors have seen a report which states that the loan would refinance a Collegiate bank loan and fund the building of a new training centre. But this document – which states the loan would contribute to meeting educational needs in Warrington – has not been made public.
After the scrutiny committee meeting was adjourned, Cllr Kennedy questioned whether, if the executive board went ahead on Thursday, it could agree to make the loan.
He wondered whether, constitutionally, the executive would be in breach of its powers and whether this would make the board members, and maybe others, personally financially liable for the loan.
Cllr Kennedy said for the council to start lending taxpayers’ money to Warrington Collegiate for it to repay its existing loan liability and, even more concerning, to fund its deficit, would be setting a very dangerous precedent.
“It would be something I definitely do not approve of, nor do I think would Warrington Council taxpayers.”
He suggested the college should be approaching the Skills Funding Agency, rather than the borough council.