Brighton & Hove City Council will have to put aside millions of pounds every year to cover a £44m loan labelled ‘high risk’ by auditors.
The council is to put aside £2.2m every year for 20 years to cover the risk of the loan to the i360 visitor attraction.
At a meeting yesterday, former Labour leader of the council, Daniel Yates, labelled it a ‘happy clappy approach to public funds’.
Cllr Yates added that hoping ‘money suddenly started pouring out the top of the i360’ was not ‘good governance’.
The council used £36.4m from the Public Works Loan Board to help fund the construction of the i360 steel tower in 2014, with i360 scheduled to make repayments every June and December over 25 years. With interest this has grown to more than £44m.
Efforts to restructure the loan were scuppered by the pandemic, which led to a further deterioration in visitor numbers.
Following numerous missed repayments, external auditor Grant Thornton highlighted the loan as having a ‘high level of uncertainty and risk’ to Brighton’s finances.
In its recently-published annual report for 2021-22, the auditor wrote: ‘Any write down of the loan would further hit the council’s limited reserves, further exacerbating the significant risk around financial sustainability.’
Overall, Grant Thornton said there was ‘considerable concern’ for the council’s sustainability over the medium term.
The auditor highlighted the council’s estimated budget gap of £21m in 2023-24 while the authority had only £14.5m available reserves.
Some 57% of the council's savings plans were ‘at risk’ in the current financial year.
This article was originally published by The MJ (£).
