Conservatives double down on damaging the town

For the last three years the Conservatives have been the official opposition on Warrington Borough Council. Their opposition has been characterised by negativity, criticising the administration and officers, and apparently sending out briefings to the national press and Private Eye to place articles damaging Warrington.

Now the outgoing Conservative MP has chosen what will probably be his last question at Prime Minister’s Question Time to spread disinformation and half truths about Warrington, and to effectively call for Warrington to declare itself bankrupt. The Liberal Democrat response to this can be found below.

After massive reductions in government funding, Warrington has faced financial challenges. The risk appetite of the Labour administration has been higher than the Liberal Democrats would have liked and has involved dealing with partners that we would not have chosen.

However, while other Councils are declaring Bankruptcy, including Conservative Councils with a much higher risk appetite than Warrington, we have remained solvent and passed a legal budget that has not been challenged. Next year Warrington will face further challenges, but fifty-five other Councils have already said they may not be able to set a balanced budget next year. The Conservative government has created a major crisis in the funding of local services and seeks to pass the blame on to anyone else.

Warrington is a successful town with attractive outlying settlements and New Town areas. It is widely recognised as a good place to live and is generally well run by dedicated Council officers. The way to ensure this remains so, is by seeking as much cross-party consensus as possible rather than seeking out every opportunity to criticise, often unfairly, as the Conservatives have done.

Warrington Liberal Democrats’ response to Andy Carter MP’s Prime Minister’s Question put on the 17^th April to the Prime Minister Rishi Sunak. All our comments have been inserted as endnotes that can be followed from the Hansard text.

Andy Carter MP (Warrington South) (Con): Every month in my constituency, the Labour-run Warrington Borough Council spends nearly £4.5 million on interest payments to cover its £1.8 billion debt.ⁱ It has used borrowing to spend on an energy company that went bustⁱⁱ, offices in Birmingham and Manchesterⁱⁱⁱ, and even a business park that it purchased through an offshore company, presumably to avoid paying tax^iv. Does the Prime Minister agree that it is time to send in the inspectors^v? Warrington Borough Council has gone too far in its money-making schemes. Local councils should be focusing on delivering great services, and the way to achieve that is by voting Conservative on 2 May.

The Prime Minister: This year, the Government announced a further £600 million in extra funding for local councils - a real-terms increase, as has been the case in every single year of this Parliament. But we all know what happens when Labour is in charge - whether it is racking up debt in Warrington, as my hon. Friend said, increasing council tax by 21% in Labour-run Birmingham, slashing services in Nottingham, or, as I have just said, higher crime on average in each Labour police and crime commissioner area. It is crystal clear that, whenever Labour is in charge, it is working people who pay the price.

Cllr Bob Barr, Leader of the Liberal Democrat Group on Warrington Borough Council, responds to Andy Carter’s PMQ

i. Andy Carter does not mention that the £4.5 million interest repayment is entirely covered by the income from the investments purchased with the “debt”. Some money out of that income also goes into a contingency fund, to cover the risk on some investments, and provides up to £2 million of funds per month to support the cost of Council services.

The Conservatives contest these figures. However, they have formed the basis of a lawful budget for Warrington for 2024-5 which has not been questioned by CIPFA, or the DLUHC and has enabled the council to continue providing services this year. The Liberal Democrat Group voted in favour of the budget as the Conservative alternative was for the Council to declare itself bankrupt and lose control of service provision.

This statement is no more honest than Boris Johnson’s assertion, during the Brexit Referendum, that the UK sends £350 million a week to the EU which was labelled “a clear misuse of official statistics” by the UK Statistics Authority. £350 million EU claim "a clear misuse of official statistics" - Full Fact

Andy Carter and the Conservatives always cite the gross debt not the net debt. While asset prices are volatile and hard to estimate, it is likely that this “debt” is balanced by about £2 billion of investment asset value or assets against which loans given by the Council are secured, in which case the net debt would be close to zero.

Of course, if the Conservatives forced a “fire sale” assets would not be sold at a fair value but at knock-down prices, and the investment income would disappear. The Council’s intention is to hold these assets for the long-term and to benefit from covenanted inflation linked rents on much of the property it owns in and outside Warrington.

ii. Together Energy, the Warrington Borough Council owned Energy Company has gone into Administration. The Liberal Democrat Group opposed this investment when it was made because local authorities generally lack the expertise to run an energy company.

However, the reason for the investment, the policy environment in which it took place and the extent of the potential loss need to be examined to understand what happened.

The Warrington Conservatives have not done this they have just concentrated on unrealistic figures for Warrington’s exposure. The administration is not complete and there may be a loss, but it is likely to be low compared to the original exposure figure the Conservatives quote, £52 million. The final loss is likely to be less than £10 million and it is possible Warrington may break even on the deal once the administration process is finalised.

It was the Conservative government that encouraged the establishment of small energy companies to provide a competitive, flexible, privatised energy market. Many of those, like Together, went bankrupt when the Ukraine War caused energy prices to rise dramatically. However Together had ‘hedged’ its contracts so was protected from the worst effects of the crisis.

Warrington invested in Together to take maximum advantage of the power generated by the Council’s solar farms and rooftop installations to maximise the returns to the Council and give the Council the flexibility to provide lower cost electricity to disadvantaged households in Warrington. It didn’t work out, but it is misleading to suggest that that was due to Council incompetence or that the investment was foolish.

iii. Warrington’s investments outside the town are mainly in sites for top national supermarkets which Andy Carter does not mention because they are on long leases and offer reliable income. The diversification into offices, in Birmingham, has proved problematic but was a Treasury Management issue. However, the Manchester investment is in a very well-regarded development on the Salford side of the Salford Manchester border and is pre-leased to BT for 20 years, another reliable and relatively safe source of income also supported by Salford Council and English Partnerships. Work begins on BT’s New Bailey HQ - Place North West

iv. Andy Carter’s slur on Warrington’s acquisition of the Birchwood Business and Science Park is also misleading. Birchwood is one of the most successful business locations in the Northwest of England. It is not unreasonable that Warrington Council prefers to own this asset, within the borough boundary, and have some control of its development rather than leaving it in the hands of fickle offshore investors.

To describe it as having been “purchased through an offshore company” is misleading. The park was already owned by an offshore company and that company was purchased to secure ownership of the park. The tax advantages had already been taken by the previous speculative private owners. What Warrington decided was not to unnecessarily incur the costs and tax disadvantages of on-shoring the ownership of Birchwood. This decision was challenged by the Liberal Democrats and some Labour back benchers. However, the park is performing well and generating income for the Council.

v. Andy Carter then invites the Prime Minister to agree with him that the time has come to “send in the inspectors”. I presume he means “commissioners”, something that usually happens when a Council has declared itself bankrupt. Warrington is not bankrupt and has been in detailed discussion with DLUHC and CIPFA about its financial position. None of these have resulted in advice that Warrington is bankrupt.

The Prime Minister, somewhat pointedly, did not say that he agreed with Andy that “inspectors” should be sent in. Instead, he went into a generalised attack on Labour Councils and reminded Parliament that an additional £600 million had been provided to local authorities. That might have been impressive if the funding gap for local authorities was not £4 billion as calculated by the cross-party Local Government Association.

Conclusion

In what will most probably be Andy Carter’s last question at Prime Minister’s Questions he chose to mislead the House by exaggerating Warrington’s financial problems and presenting them in an unbalanced way. This is unfair to Council officers and to the people of Warrington. Such statements from the local MP will do nothing to encourage investment in Warrington or help the residents.

Warrington is one of the worst funded authorities in the country. We agree with Andy Carter that turning Local authorities into investment banks is not a sensible way of funding them. But this has been forced on local government by the Conservatives.

To see the worst examples, one need only look at the mess Conservative administrations have made of authorities they control or have recently controlled. Thurrock Thurrock Council issues S114 notice of financial distress - BBC News, Spelthorne, Woking Surrey councils rack up some of UK's biggest debts - BBC News and Cheshire East Cheshire East Council leader created culture of fear, report finds - BBC News, among many others demonstrate that the Conservatives do not have the answer.

All the Conservatives offer Warrington is early bankruptcy, slashing services and an MP who has joined his most extreme Council colleagues in knocking the town.