Controversial £3m loan to shopping centre owners will proceed after challenge fails
A call in of the decision to loan £3m to wealthy Grosvenor shopping centre owners has led to no further action
By Sarah Ward
A controversial deal to lend £3m to a Northampton shopping centre owner in exchange for amends to a restrictive lease, will go ahead, after a challenge failed last night.
Councillors on West Northamptonshire Council’s corporate scrutiny committee had considered a ‘call in’ of the decision made by the Conservative cabinet in December to loan £3m to Grosvenor Centre owner Evolve in exchange for changes to a restrictive lease on adjourning Belgrave House.
The decision, plus an investment of £375,000, had been called in by a group of councillors due to concerns about why the council was borrowing cash to lend to the firm, part of which would help international retailer H & M move from nearby Abington Street into the shopping centre in a bid to increase footfall.
An ill-fated and expensive scheme progressed by the former Northampton Borough Council (NBC) to turn Belgrave House into more than 100 key worker flats was scrapped last year and has now been declared unviable due to fire safety requirements. However on the last day of its existence in 2021 NBC had entered into a restrictive lease which meant the only permitted use for the building is housing.
The new deal would mean the restrictive lease would end, and at last night’s meeting it became clear that the £3m Grosvenor loan deal is needed in order to progress the bigger Greyfriars regeneration scheme, which the meeting heard is expected to cost half a billion pounds. The project is being backed by private firm the English Cities Fund along with government agency Homes England. As yet full details of the scheme have not been presented to the full council.
Cabinet member for local economy Cllr Daniel Lister told the committee:
“You have to remember this is a small loan to a big company, who are going to pay it back with security that is enabling a very big development. We have the English Cities Fund on the table who want to put millions of pounds into the Greyfriars Scheme. We are at risk as a council of making ourselves look like we are incapable of making sound decisions when we have a very small investment that is going to be paid back that is enabling all these other things to come forward and most importantly unlock Belgrave House because that brings forward the Greyfriars scheme. We have to be sensible about this.”
But voicing the problematic history of recent development deals in Northampton, chair of scrutiny, Cllr Ian McCord said:
“I accept everything that you say - except history is not on your side. There is an active court case, that we all know about.”
The former NBC was allegedly defrauded people connected to the town’s football club, when it loaned £10.75m for a new stand. The money went missing and almost ten years on there is now an active court case.
The authority also did a poor deal in 2013 when it sold off the former Church’s headquarters at St James for a loss, which the new council has since bought back - handing the shoe firm a profit.
A deal struck by the former NBC in its dying days to redevelop part of the former university campus has also had to be scrapped for viability reasons.
At the meeting assistant director for assets Simon Bowers said the new loan deal was needed in order to ‘unscramble the omelette’ created by the former predecessor council.
Cllr McCord asked how the authority could be trusted by the public following previous bad deals?
He said:
“I appreciate the people are different, but what reassurances can this council give the residents that a set of council employees entered into a set of arrangements with financial and legal consequences and now we are saying a few years later ‘they were a bunch of clowns and they did not know what they were talking about and these arrangements they entered into were rubbish and need to be redone.”
Due to signing the call-in, scrutiny members Cllr Wendy Randall (leader of the Labour group) and Cllr Jonathan Harris (Lib Dem deputy leader) could not take their place on the committee, meaning that only a handful of councillors were involved.
A number of councillors questioned the deal. Leader of the Liberal Democrat group Cllr Sally Beardsworth said:
“I don’t think it is fair to be helping a big firm when so many small ones are struggling.”
And Conservative backbencher Fiona Coles also questioned the deal and whether the redevelopment of the shopping centre and the wider Greyfriars scheme was another project which would falter.
She said:
“How much money are we going to keep spending, laying the groundwork for things to then not happen?
“What is the overall vision? What is it that we want to do? As a councillor I am not clear on that, and if I’m not clear, the public definitely isn’t.”
But Simon Bowers, who has been involved in negotiations said the way the new deal had been structured had minimised the risk to the council.
He said the deal with Evolve was time sensitive and would need to be complicated over the next few weeks. He said the company was fair but ‘highly commercial’.
And the council’s chief finance officer Martin Henry said ‘we will be crawling over all these arrangements’.
After two hours of debate the committee voted against no further action and so the decision will not go back to the cabinet to reconsider.
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Assistant Director for assets Simon Bower said "Evolve" is "Commercially astute" . He is right. They are, but he is not. On top of that, there is a number of Councillors who were involved with the original "negotiations" that has landed them up in this mess. Northampton and Northamptonshire have more pressing problems than trying to negotiate with International companies who will always get the better of them.