Council's decision to loan £3 million to Northampton shopping centre called in for scrutiny after concerns raised by opposition

Opposition councillors on WNC have asked for the cabinet’s decision to give a multi-million-pound loan to Evolve, the Grosvenor Shopping Centre owners, to be scrutinised. The loan will partly go towards moving H&M into a new store.

Leader of the Labour Group, Councillor Wendy Randall, said she wanted to ensure that members weren’t “having the wool pulled over our eyes” and be able to investigate the plans fully.

The final £1 million of the loan would also support the introduction of flexible workspaces into the shopping centre. At the cabinet meeting last Tuesday, December 10, a further £375,000 capital investment from WNC was also green-lit to fund new ‘micro shops’ within the venue.

Cllr Randall told the Local Democracy Reporting Service: “As a united opposition, we had so many questions over these agreements that we couldn’t let it pass without the proper scrutiny. Why do we need to give a loan to a company worth £219 billion? Why should we pay to install micro-shops in a shopping centre that only gives us £2 a year in rent?

“This scheme seems a long time in the making, yet we are only given a week between when the papers are published to the Cabinet meeting to scrutinise it. This is just not enough time for something of this scale and for all we know we could be having the wool pulled over our eyes, so I’m very glad this deal has been put on hold while councillors investigate it further.

“As a council, we need to make sure we’re spending money correctly.”

The West Northants Liberal Democrat and Independent groups on the council have supported the call for greater supervision of the deal. The leaders of both groups also voiced their concerns to the cabinet during the discussion last week, but were told that the level of security being sought for the loan was high.

Councillor Ian McCord, leader of the Independents and chair of the Scrutiny Committee, said: “I welcome the call in. I raised some concerns at the cabinet meeting and these are clearly shared by members from all parties and none, that have signed the call in.

“I am particularly concerned at the state aid implications – the report said WNC would pass the loan to the property company at the same cost as WNC were paying – but WNC borrow from Public Works Loan Board (PWLB) at much lower rates than a commercial client may be able to.

“Unless this money was lent at a commercial rate it could be argued the difference was a subsidy. There is a disregarded level which may apply to the smaller £375,000 amounts but the bigger seven figures sums need to be checked out.”

Deputy Leader of the Liberal Democrat Group, Councillor Jonathan Harris, added: “Whilst councils can make loans to local enterprises, charities, wholly owned companies, and joint ventures in support of economic growth strategies, we have some concerns that there may be some issues related to state aid rules.

“Sadly, we have seen a number of retailers leave the town and so far as we are aware, this loan option has not been applied to others. H&M’s brand value is estimated to be $13.6 billion this year, it seems odd to be supporting organisations of this size and scale.

“We have empty retail units in our rural towns, such as Daventry, and primary service villages such as Brixworth. What are we doing to encourage business back into these? We have supported this call-in to ensure that taxpayers have the chance to fully understand if this decision is acceptable and to scrutinise the detail.”

The cabinet heard last week that the loan deal was reached regarding negotiations with Evolve to change the lease to Belgrave House and gain permission to install renewable energy equipment on the Grosvenor multistorey car park. Leader of WNC, Councillor Adam Brown, said the report was “not only a solution to that problem but also a proposal that brings together a lot of benefits”.

A council spokesperson has confirmed that the decision has formally been called in for review. It said that the Corporate Overview and Scrutiny Committee will hold an extraordinary meeting on January 20 to consider the request.

The committee could report back to either take no action or ask the cabinet to reconsider. The outcome and decision will be published following the committee’s review.