Council to pay £137m to fund development of Manchester office

The site is expected to be turned into a major regional hub for the firm accommodating up to 2,500 employees.

The deal was recently approved by the council’s cabinet, in principle, although it was discussed in private.

In November 2019, the council became aware that the owner of the final office development project at New Bailey in Manchester city centre, English Cities Fund, had agreed a new letting to the telecommunications company and were seeking ‘investment interest’.

Planning permission is in place for the final part of the office development site, although it is yet to be built.

The land is held on a 250-year lease from Salford City Council at a peppercorn rent.

The deal will see the council invest to finance the development for a commercial return – and receive rent from the completion date.

The council will pay more than £136,995,500 to fund the development, with its rental income expected to top £5.92 million a year.

The tenant is expected to enter into a 20-year lease arrangement from the date of completion, which is expected to be summer 2022.

Council chief executive Steven Broomhead says the deal is currently going through the legal process but confirmed the council is ‘progressing’ the deal.

Steven Broomhead

“The reason we are doing it is obviously on an invest and return basis again,” he said.

“We have agreed, in principle, to enter into negotiations and go through legal processes regarding its purchase.”

Cllr Bob Barr, leader of the town’s Liberal Democrats, the Opposition group, has issued a statement.

He said: “Warrington’s programme of funding council services increasingly out of the revenue obtained from property and commercial investments is audacious and necessary, but not reckless.

“Officers are skilled in risk management and buy-in professional advice as part of due diligence. However, these risks should not be necessary.

“Councils should have been allowed to fund their services through local taxes. Instead, Government has given local authorities access to cheap loans to fund their speculative investment programmes.

“While investing in property involves commercial confidentiality, the underlying principles should have been agreed, and discussed in confidence, by the whole council.

Cllr Bob Barr

“Instead the programme is carried out with key confidential documents being withheld from most councillors because members of the Labour group cannot be trusted not to leak them.

“Taking risks on behalf of the people of Warrington is now an unfortunate, but necessary, fact of life to support services.

“Doing so in secret, by a Council where decisions are made only by the leader, deputy and cabinet, should not be.”

But Conservative Warrington South MP Andy Carter is calling for the deal to be halted after expressing concerns over the ‘increasing risks’ surrounding commercial property following the coronavirus pandemic.

He added: “I’m not against a sensible level of borrowing to fund some investments which might add to the council’s income streams – but Warrington Labour have taken this to a whole new level with in excess of £1.3 billion worth of borrowing and the Liberal Democrats have been complicit in supporting their reckless approach.

MP Andy Carter

“All of these schemes are using money which has been borrowed and as we all know, whenever you borrow you have to pay the money back with interest.

“The council simply doesn’t understand when enough is enough.

“This debt will ultimately fall onto the shoulders of council taxpayers if these investments fail. We need far greater clarity and transparency in the spending plans if we are to prevent bad decisions from going ahead which will only add more financial burden on us all.”