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Centre accounts for around £92m of Council’s debts
25/09/2024
New administration intends to “maximise the return from assets that are funded by debt, crucially to minimise any impact on services”
Around £92m of the Cherwell District Council’s outstanding debt is associated with purchasing, developing and enhancing Castle Quay.
As at March 31, 2024 the council owed £181m. A Freedom of Information request submitted by Banbury FM has revealed 51% of this outstanding debt is associated with the Castle Quay development, including the centre itself, the leisure complex, hotel and supermarket.
The Council’s debts built up during the Conservative’s time running Cherwell. Since May a Liberal Democrat led administration has taken charge. In a joint statement Council Leader David Hingley and Deputy Leader Lesley Mclean said it “cannot be denied that the purchase of Castle Quay was a significant cost to the council that added greatly to the debt”.
They added: “As the new administration, we are in the process of understanding the income streams that assist with the repayment of the debt and are looking to maximise Castle Quay’s ongoing potential to be a multi-use centre that residents of Banbury and its visitors can be proud of, reflecting our desire to push forward a dynamic regeneration of the town.”
Cherwell District Council’s operation will shortly be relocating from Bodicote House to Castle Quay – a move which has cross-party support and which the Council says is more cost effective than remaining in their current offices. The process of selling Bodicote House is underway, but the sale price is yet to be disclosed.
A budget of £4.5m has been allowed to cover the costs associated with the move to Castle Quay.
Of 166 district councils in the country operating within the two tier local authority system Cherwell is 27th in a list of the amount of debt the authority has. In Oxfordshire at district level only Oxford city council has more debt. West Oxfordshire, South Oxfordshire and Vale of White Horse district councils are all debt free.
Councillors Hingley and McLean noted under their leadership the council “will take sensible financial decisions to maximise the return from assets that are funded by debt, crucially to minimise any impact on services.”
The Labour Group stands by the decision to purchase Castle Quay. Group Leader Councillor Amanda Watkins said: “We have always supported the purchase of Castle Quay and development of Castle Quay 2 for the purpose of regeneration. You only have to look at how popular Castle Quay 2 is as a destination to see that it has been a success.”
She added: “the Council did not borrow to build a shopping centre. It borrowed to buy one. One that it already had a significant stake in and that was going to be left to wrack and ruin by the then majority shareholder.
“The alternative would have been an empty shopping centre in the middle of town and none of the amenities in Castle Quay 2. I certainly know what my preference would be, and I know that the decision to buy Castle Quay was the right one for the people of Banbury, surrounding areas, and indeed, all visitors to the town.”
Conservative Councillors controlled Cherwell from 2000 to 2023. Banbury FM invited Councillor Eddie Reeves, the current leader of the Conservative Group, the opportunity to comment on the situation but he hasn’t responded to us.
Here are the full statements from leading Councillors at Cherwell District Council.
Councillor David Hingley, Leader of Cherwell District Council and Councillor Lesley McLean, Deputy Leader of the Council and Portfolio Holder for Finance, Property and Regeneration:
“As the new administration at Cherwell, we have inherited a financial position which includes £181m of debt, raising important questions for how we approach the council’s budget. Residents should be assured that the new administration will take sensible financial decisions to maximise the return from assets that are funded by debt, crucially to minimise any impact on services.
“Historically, the council has taken loans to fund capital projects. The majority of this debt is low interest fixed rate loans which minimises costs, and plans are in place within our mid-term financial strategy to repay those debt costs. It is our firm intention to maintain the council on a secure financial footing, making prudent decisions to ensure we balance the budget and remain fiscally responsible.
“Although in support of the economy of Banbury, a mission we place at the centre of our work, it cannot be denied that the purchase of Castle Quay was a significant cost to the council that added greatly to the debt. As the new administration, we are in the process of understanding the income streams that assist with the repayment of the debt and are looking to maximise Castle Quay’s ongoing potential to be a multi-use centre that residents of Banbury and its visitors can be proud of, reflecting our desire to push forward a dynamic regeneration of the town. The council will shortly be relocating to Castle Quay as part of this endeavour, a move that has cross-party support and which is more cost effective than remaining in Bodicote House.
“In addition, we are actively looking at every opportunity to protect services, pursue sensible economic development and ensure the council is not put at risk. Residents can be assured that this administration is determined to safeguard their vital local services.”
Councillor Amanda Watkins, Leader of the Labour Group:
“We have always supported the purchase of Castle Quay and development of Castle Quay 2 for the purpose of regeneration. You only have to look at how popular Castle Quay 2 is as a destination to see that it has been a success.
“Cherwell is a well-run Council that prides itself on its financial prudence and sound fiscal approach.
“Loans are used to fund important capital projects that will deliver better outcomes for our communities. This is customary practice in local government and not an indicator of the financial health of an organisation provided, like Cherwell, you are fiscally responsible and have a clear and deliverable strategy for balancing the budget. For Cherwell, this has involved securing the majority of its debt with low fixed interest rates to minimise costs and ensuring plans are in place within the medium-term financial strategy to repay anticipated debt costs. This puts CDC on a solid and secure financial footing, and decisions will continue where necessary to ensure the budget is balanced and CDC remain fiscally responsible.
“As is best practice in local government, both the organisational performance and budget management are reported monthly to the Executive, with regular Member scrutiny taking place at the Budget Planning Committee. Additionally, quarterly treasury management monitoring reports are taken to the Accounts, Audit and Risk Committee, which includes updates on the level of debt the council holds and the forecast for when debt levels are expected to fall. All Councillors can access these papers and attend any committee to ask questions.
“The purchase of Castle Quay shopping centre and subsequent development of Castle Quay 2 were carried out to support the economy of Cherwell in line with the Council’s priorities. The decision to purchase Castle Quay was one made by Full Council with cross party support. The decision to relocate the Council’s headquarters to Castle Quay was taken subject to a business case that will lead to lower overall running costs for the council. Your comment that “Even more is set to be spent on the project with the move from Bodicote House to Castle Quay having a budget provision of £4.5m*” does not take into account that Bodicote House would need a significant amount spent on it over the next few years to make it an acceptable workplace. As CDC already own Castle Quay, it seems an obvious place to move to.
“Castle Quay’s regeneration was delayed by the pandemic, but going forward it will be a mixed-use scheme, not just retail. Having the Council Offices located there will increase footfall, which will have a positive impact on the whole town centre area.
“You should also note that the Council did not borrow to build a shopping centre. It borrowed to buy one. One that it already had a significant stake in and that was going to be left to wrack and ruin by the then majority shareholder. The alternative would have been an empty shopping centre in the middle of town and none of the amenities in Castle Quay 2. I certainly know what my preference would be, and I know that the decision to buy Castle Quay was the right one for the people of Banbury, surrounding areas, and indeed, all visitors to the town.”
Councillor Ian Middleton, Leader of the the Green Independent Alliance, said he broadly agreed with the response from the Leader and Deputy Leader of the Council. He added:
“My personal position on the purchase of the shopping centre is already well known so there seems little point in my re-iterating that now. Suffice to say that as a member of the new CDC executive I have a responsibility to ensure that all aspects of the council’s operations are run efficiently and for the benefit of our residents across the district.
“Notwithstanding my concerns about the original decision to buy the centre and the subsequent impact I believe that has had on council finances, we are where we are. I‘m committed to doing whatever I can to make Castle Quay a success going forwards, and as someone with over 30 years’ experience in the retail sector, I hope I will be able to provide a positive input into helping to make that happen.”
Published: by Banbury FM Newsteam