A council leader in North Yorkshire has denied 'bailing out' a local housing association with a £35m loan as he hit out at "inaccurate, misleading and politically motivated" claims about the scheme.
In a statement released to the media, Hambleton District Council leader Mark Robson defended the loan made to Broadacres Housing Association five years ago.
The housing association was set up in 1993 to take on council housing stock from Hambleton and now manages around 6,500 homes.
In February 2017 Broadacres was heavily criticised by the regulator and given a non-compliant rating for governance after a subsidiary which was working on local developments, including the huge 900 home Sowerby Gateway development near Thirsk, suffered heavy losses.
It has since been upgraded by regulators and new developers are now working to complete the Sowerby Gateway scheme.
Last month campaigner Dr John Gibbins from Sowerby, one of the original objectors to the scheme, raised fears that public money could be jeopardised.
The Northern Echo newspaper reported that he told a meeting of the Tory-run council's Cabinet: “We should know exactly what the agreement is between Hambleton district council and Broadacres, are Broadacres acting as an independent developer. What are the loans secured against and who owns the land.
“I am concerned that due diligence has not been carried out and there is a danger that public money could be jeopardised."
In his statement, Mr Robson said the council offered Broadacres the loan at a commercial rate of interest, secured on the association’s housing stock, in a move which benefits both
“This loan was not ‘bailing out’ Broadacres from financial difficulties as suggested – it is simply a transaction that benefits both organisations,” he said
“In the last financial year Hambleton District Council received £1.2m in interest payments which is supporting our residents and front line services and far better in our hands than in
the hands of a bank.
“There has been a good deal of misinformation in the press about this loan – it has been inaccurate, misleading and politically motivated. Prior to the loan being offered a great deal
of due diligence was undertaken for the council by independent auditors and financial advisors which concluded that Broadacres was able to meet its repayment obligations.
“At no time have public funds been at risk – the council has instead benefitted from being able to offer this service rather than see the loan come from a high street bank.”