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Walsall Council in 'high risk' £13.8m loan to buy Saddlers Centre

Walsall Council took out a ‘high risk’ loan of £13.8 million to buy the Saddlers Centre, it can be revealed.

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Walsall Council took out a £13.8m loan to buy the Saddlers Centre

The Labour-run authority secured the Government funding to buy the shopping centre last year, in a ‘behind closed doors’ deal widely lambasted as a waste of taxpayers’ money.

Bosses had refused to reveal how it financed the deal, but the Debt Management Office has provided details via a Freedom of Information request.

It shows the council took out a £13.8m interest-only loan in August 2017. Interest of £92,460 will be paid twice a year over five years, with the full balance due in February 2023.

Last month the council announced it had made a profit of more than £500,000 since it bought the centre.

The authority has said it hopes it will have netted £10m by the time it has to pay back the loan.

But Eddie Hughes, the Conservative MP for Walsall North, said the success of the centre was was ‘highly questionable’ over the long-term. He accused the authority of being ‘reckless’ with the public purse.

“This plan is based on that the council can somehow get the Saddlers Centre to generate more revenue than the people who had it before,” Mr Hughes said.

“They were specialists in the field but couldn’t make it work. I want to know whether the council has an exit strategy in place if things go wrong. The reality is that this is a high risk and reckless investment that could leave taxpayers facing a massive bill in five years time.

“They talk about a £500,000 profit but the capital due and the loan balance remain outstanding.”

Mr Hughes' request to the authority for financial details of the deal was rejected in January on the grounds that it was not in the public interest.

He added: “The council has some serious questions to answer over the nature of this deal and the fact that they would not disclose any of the financial details.

“While they refused to publish information under ‘public interest grounds’, it is fortunate that other public sector organisations will.”

Walsall Council leader Sean Coughlan has said the deal would enable the council to invest cash back into services.

Lib Dem councillor Ian Shires has said making the decision to buy the centre ‘behind closed doors’ was ‘not the best decision’ the council has made.

Last month the council announced that the centre had continued to 'outperform national shopping centre performance'.

A total of 611,224 and 818,881 shoppers visited in November and December respectively, marking an increase of 0.4 per cent on the same period in 2016.