- Council’s Custom Pharma “Sale and Leaseback deal” in Moulsecoomb exposes City taxpayers to risk
- Public Works Loan Board Scheme reminiscent of i360 model say Conservatives
Conservative Group Leader Steve Bell CBE has warned that that the Council has exposed residents to a significant financial risk after its decision at the Policy and Resources meeting.
A sale and leaseback proposal agreed with Custom Pharma will see the Council acquire a building from the company in Moulsecoomb Way and then lease it back to them, all funded by the City taking out a large loan from the Public Works Loan Board.
Custom Pharma will use the sum paid by the council for a specialist fit-out of the building.
The Greens and Labour pushed the scheme through, with Conservatives voting against.
Conservative Group Leader Steve Bell said that the proposal was not fiscally responsible in the current circumstances the city faced.
“With my fiscal approach I have to ask these questions: Are we really going to borrow money through the public loans board to lend to a private company? And why can they not finance this themselves? This company is predominantly owned by an American company – this provides a degree of risk” he said.
“I will never support borrowing money to lend to a private business. If it’s a private business it should be able to find its own money and it should be able to find its own investors” he said.
Councillor Bell asked if Directors’ Guarantees would be applied to the scheme to protect taxpayers in the event of the company collapsing.
“If no Directors’ Guarantees are applied then the City could find itself in a similar position as we do with the i360 – responsible for a mountain of debt” he said.
Conservative Finance Spokesperson Joe Miller said that he fundamentally disagreed with the officer’s characterisation of the deal.
“While I welcome in principal the diversification of the council’s asset management portfolio, the consequences for the City if the company collapsed could be grave” he said.
“I fundamentally disagree with what officers have said. In practice this isn’t an asset purchase it is an investment in a business similar to the i360.
“I’ve been informed the company has other equity options to fund this programme and keep them in the city.
“What they are effectively doing is using us as a bank – because we can offer them lower interest rates than whatever their other option is.
“We would be funding the development of a custom-build building that would be difficult to rent to another company. Conversions would be costly. There are other safer options for the council’s asset portfolio” he added.