Council defends borrowing £4m towards Levelling Up projects

Borrowing nearly £4 million to enable the regeneration of the Riverside area of Shrewsbury to get underway is a “worthwhile and justifiable investment”, the councillor leading the project has said.

Councillor Dean Carroll made the comments in response to criticism from opposition councillors that the loan repayments would add yet more pressure onto the council’s already stretched budget.

It is expected that the repayments will be £269,000 a year for 25 years, with an interest rate of five per cent.

The authority’s cabinet met on Thursday to agree to take out the loan, which will form the majority of the council’s match funding contribution to two projects in Shrewsbury which were awarded a total of £18.7 million from the government’s Levelling Up Fund earlier this year.

Most of the money will go towards enabling and infrastructure works for the planned redevelopment of the Riverside area of Shrewsbury.

The rest will be for the council’s plan for ‘Transforming Movement and Public Spaces in Shrewsbury’.

A report to cabinet said the council’s total match funding contribution was £5m, which includes £1.25 million in ‘land and asset contributions’.

As well as the match funding, the report sought cabinet approval to formally accept the Levelling Up grant and to delegate authority to the director of place, Mark Barrow, to complete the business plans.

It also said the enabling and infrastructure works for the Riverside redevelopment would be included in the planning application for the demolition of the shopping centre and medical practice.

Councillor Carroll said the Levelling Up award would “turbo-charge” the two projects.

However opposition members blasted the proposal to borrow the funds, saying the council should have planned ahead and earmarked the money from capital receipts, received when assets are sold.

Councillor Roger Evans, Liberal Democrat group leader, said the council should not have to plough more money in as it is already the owner of the sites – having bought the Riverside shopping centre, along with the Darwin and Pride Hill centres, for a total of £51m in 2018.

He said: “I just can’t understand why we are not searching for partners who will match what we have as the landowner in capital, and not actually need to spend any of Shropshire council tax payers’ money.”

Councillor Julia Buckley, Labour group leader, said: “I’m particularly concerned that at this very late stage we are presented with this report which is a ‘lastminute.com’ scrabble around for the match funding.”

Councillor Buckley said she had pressed the council’s leadership many times for information on where the match funding would come from if any of its four Levelling Up bids were successful.

She said: “This council cannot afford any more revenue commitments. It certainly cannot afford this £270,000 every year on top of everything else.

“This has come about because of a lack of planning. We all knew this bid was going in, we all knew how much it was for, we all knew what the match commitment was.

“So why, after the event, at the last minute, are we now being told that we are going to have to borrow to fill yet another gap?

“Interest rates have spiralled because of the terrible economy, thanks to this terrible government, and borrowing rates are up at five per cent.”

Councillor Buckley also questioned what the council was planning to do to fund any potential overspend on the North West Relief Road to avoid even more borrowing.

She said: “This is a plea, please, that we plan ahead and don’t find ourselves facing more and more revenue costs because of a lack of planning by this administration.”

Councillor Carroll said Councillor Buckley’s comments about the North West Relief Road were “wholly irrelevant” to the Levelling Up award.

He said the economic benefits the schemes would bring to Shrewsbury made the expenditure “a justified and worthwhile investment”.

Councillor Carroll added: “Of course we don’t want to add any more pressure onto our revenue budget than we absolutely have to, however this is leveraging – between our match funding and the government’s Levelling Up Fund award – in the region of £20 million into Shrewsbury town centre.”