Doncaster Sheffield Airport: axing loan would cost £50m and plunge council into financial crisis, report says

The local authority could go effectively bankrupt, a bombshell report has claimed, if councillors choose to revoke £57m of borrowing later this month, which was previously approved to front-load the airport’s funding.

The revelations come as part of reports, published by the council, ahead of the vote to cancel the loan on May 11.

Landowner Peel Group closed DSA in 2022, and now the council is in the process of reopening the airport via arms-length company Fly Doncaster.

However, Reform councillors have called for an emergency meeting, putting forward a motion to rescind the council’s £57m loan to get the project up and running.

The party’s group leader Coun Craig Ward has said his party “supports the reopening of DSA”, however he has claimed the borrowing was approved in November “without full material facts” about the lease, signed with landowners Peel in 2024.

A subsequent leak of the airport lease to The Yorkshire Post in January revealed a series of controversial clauses councillors and the public had previously been unaware of.

Labour politicians, including the area’s directly-elected mayor Ros Jones, have warned that cancelling the loan would “kill” the project.

Now the council’s official report ahead of the vote claimed that this would cost £48.6m due to “lease commitments … and closure costs”, with additional potential redundancy payouts not included.

It said: “If the borrowing decision is rescinded, the programme would be unable to continue beyond the immediate period unless alternative funding could be identified at pace.

“Otherwise, rescinding the borrowing decision would result in the termination of the airport reopening programme and the council becoming responsible for significant unfunded future liabilities associated with lease commitments, site holding and closure costs.

“Current estimates indicate quantified future liabilities of approximately £48.6m to 2031, with further uncertainty around redundancy and contract cessation costs.”

The report also stated that “alternative funding would need to be identified urgently, and failure to do so would increase the risk” of the council having to issue a Section 114 notice - which effectively means admitting bankruptcy.

Cancelling the loan would also push back the target for commercial flights to start at Easter 2028 by between six months to a year, even if other funds were found.

The document said that any closure costs would not be able to be paid by the £160m of gainshare funding, which has been pledged by South Yorkshire Mayor Oliver Coppard.

However, this will not be issued to the council unless certain parts of the 125-year lease for the airport land are renegotiated.

The council report has revealed that these discussions are currently “on hold”, with a particularly sticking point being proposed changes to a controversial “turnover rent” clause.

As reported by this paper in January, this could see 20 per cent of DSA's annual turnover above annual base rent payments potentially be paid to Peel - including taxpayer-funded grants from local and national government.

Despite airport sources seeking to downplay this clause, the document states the issue has been a "heavily debated point".

It added that the lease negotiation “is currently on hold due to the current financial uncertainties, including the turnover considerations”.

Reform deputy leader Richard Tice said that Labour had already “pressed the pause button” on the project, with Mr Coppard’s devolved funding, and pledged a future government led by Nigel Farage would force Peel to sell the land via compulsory purchase order.

A Reform UK Doncaster spokesman said: “The officer’s report describes a financial crisis, but does not demonstrate one. The £48.6m closure cost is spread until 2031 and, on the report’s own figures, is not a Section 114 trigger.

“The same report concedes that if the borrowing is rescinded, the SYMCA Gainshare funding would remain available to Doncaster for other projects, contradicting the suggestion that councillors face a binary choice.”

A Peel spokesperson said: “We are aware of the report and will await the outcome of the relevant decisions in due course. We have no further comment at this stage.”