Council agrees to defer University of Northampton's £8.5m loan repayment by 12 months

The sum, which was due to be paid back on March 10 next year, will instead now be due on the same date in 2022 after agreement by the borough council’s cabinet on Wednesday (December 16)

In 2014 the cabinet agreed to a £46 million loan that would allow the University to support the development of its new Waterside campus, with the money being handed over in 2016.

The loan, as was the case with the £10.25 million loan to the Cobblers, was financed by the council itself taking loans from the Public Works Loan Board (PWLB). A £17.5 million sum was financed through a 40-year PWLB fixed rate annuity loan, while £28.5 million was financed through a five-year PWLB fixed rate maturity loan.

The University paid off £20 million of the latter loan in January but the remaining £8.5 million, due by the March 10 deadline, is unlikely to materialise in time due to delays in selling off its Avenue campus near the Racecourse.

At the same cabinet meeting on Wednesday, the Conservative cabinet approved a bid by the council’s property company to purchase the St George’s Avenue site, but the deal is unlikely to conclude with sufficient time for the sum to be repaid. Almost 200 affordable homes will be built on the site after planning permission was granted a few weeks ago.

Councillor Brandon Eldred, the cabinet member for finance, told colleagues: “This deferment is to allow planned site disposals to be made which have suffered from delays this year due to COVID-19. It’s of minimal risk to us as the treasury has provided assurances that they will extend their guarantee for a further year.”

Due to the nature of the PWLB funds that the council borrowed, the authority will need to repay those funds and reborrow £8.5 million for the twelve month extension.

The University has agreed to fund all costs associated with amendments to the agreements along with a nominal one off loan premium of £50,000 to reflect ‘the additional administration costs during the year’.

Labour leader Councillor Danielle Stone, addressing the cabinet, said: “I do think it’s important that the public realise the significant difference between this loan and the loan at Sixfields. We had a really bad reputation around all of that, and a lot of work has been done to repair that reputation. This is a significantly different order of loan because it has been underwritten, but also the University has huge assets.

“There will always be unforeseen risks and events, it’s about how you handle it. It seems to me that this has been handled really well.”

Council leader Jonathan Nunn added: It’s been a very carefully approached thing but it’s the right thing to do for sure.”