Regular readers of this column will be aware that on more than one occasion I have defended Warrington Borough Council’s policy of using the commercial property market as a means of generating income.

I believe there’s a good reason for this. Over the 12 years the Conservatives have been in power at Westminister, central government council funding has been slashed, coupled with a cap on council tax increases, meaning many councils are struggling to balance their budgets.

The inevitable outcome for many has been a savage cut to council services.

As theguardian.com website reported in October: “Libraries and children’s centres are closing and home pick-ups for young disabled people being cancelled as councils try to meet a £3.2bn budget shortfall next year.

“With inflation and energy prices eating into budgets, local authorities across the UK are facing a record black hole that is unlikely to be plugged by central government as the Treasury is seeking to squeeze spending to make up for a £30-50bn shortfall in the public finances.”

With this in mind, I didn’t have a problem with Warrington’s solution to the problem, borrowing money at low interest rates to invest in commercial properties and other assets that generate rental income.

That income is used to service the underlying debt and the surplus goes into the council’s coffers to provide services for the people of the town. Yes, it appears that Warrington is carrying a massive amount of debt but that debt is backed by assets that can always be sold if needs be.

Think of it like a mortgage.

But there are limits to my support of the council’s borrow-to-invest policy. I still have grave reservations about its involvement with the Redwood Bank project and I’m still not sure about the more than £200m loan facility it gave to The Hut Group (THG) – or was the loan made instead to Matt Moulding, the billionaire owner of THG?

The council extended a £200m loan facility to a company controlled by Moulding, one of the largest council loans on record, from which it has taken three drawdowns totalling more than £151m.

Back in August last year, a council spokesman attempted to address the confusion surrounding the loan – was it made to a public company listed on the Stock Exchange or was it made to a company controlled by Moulding.

THG has a huge site on the town’s Omega development and the council spokesman said: “Our objective is to secure good quality jobs for local residents and to support the local economy.

“This arrangement is secured against assets and The Hut Group, as one of Warrington’s largest employers, has brought in a significant number of jobs locally.”

So even that statement is still muddling up THG with the loan which in fact appears to have been made to Moulding.

But this week, the plot thickened even more when the Financial Times reported that councillors approved a £202mn loan after an internal report erroneously said the money was going to ecommerce company THG.

The loan was approved by councillors to entities controlled by Moulding in October 2020 after reviewing a council report that repeatedly described THG as the borrower and touted the company’s financial strength.

“The Council has the opportunity to provide a £202.133mn investment loan to The Hut Group (THG) against a portfolio of…assets in the North West,” said the report, obtained by the Financial Times.

According to the FT, Warrington Borough Council, THG and Moulding say all parties ‘knew the loan was being made to entities controlled by Moulding well before the facility was agreed and that the council was aware that THG was not intended to be a counterparty’.

The fact remains that the council’s borrow-to-invest policy is controversial and not without peril. The potential risks became very obvious earlier this year when Thurrock Council in Essex admitted to enormous losses from a string of disastrous investments into solar energy projects. The government finally had to step in and strip Thurrock’s control of its own finances.

I’m not suggesting for one moment that Warrington is in the same boat as Thurrock or has even done anything wrong in this instance but if the council is going to continue down this route, it needs to be up front with the people of the town and not hide behind mealy-mouthed statements.

We deserve the truth.