Agenda item

To receive a report by the Head of Finance giving details of a loan request by the Wildlife Trust for Bedfordshire, Cambridgeshire, Northamptonshire and Peterborough.

Councillor T V Rogers was in attendance for this item.

With the aid of a report by the Head of Finance (a copy of which is appended in the Minute Book) the Panel was acquainted with details of a request for a loan from the Wildlife Trust for Bedfordshire, Cambridgeshire, Northamptonshire and Peterborough. Members were informed that the loan of up to £1.2M had been requested in order that the Trust could acquire the leasehold of land to which it already held the freehold. This would assist in delivering the Great Fen Masterplan.

The Panel was informed that the Trust was confidant of obtaining sufficient donations and grants over the next few years in order to repay the loan. The Trust was therefore seeking a flexible arrangement, which would allow for early repayment.

The Panel discussed detailed aspects of the proposed loan and the wider implications of it. With regard to the terms of the loan, Members expressed concern about the security being offered. While an independent valuation would be obtained from the County Council (at the cost of the Wildlife Trust), it was pointed out that there had been significant fluctuations in the value of agricultural land in recent years, which could mean that the future value of the land might not match the value of the loan. In addition, it was suggested that the Council should consider whether there was a reasonable chance that, should it be necessary, the sale of the land could be achieved. Members were of the view that these points should be taken into account during negotiations on the security provided as part of any loan agreement and that if an agreement was reached, it should comply strictly with the terms of the Council’s Treasury Management Strategy.

Further comments were made that the Wildlife Trust’s funding raising plans should be examined to establish whether they were realistic and achievable and that the Council should aim to maximise the Council’s return on the sum loaned.

On the wider implications of the report, the Panel considered the principle of making the loan. A Member commented on the rise in the importance attached to food security, particularly as the Great Fen occupied high quality agricultural land, and that the loan should not be used to encourage local farmers to relinquish their farm tenancies. The view also was expressed that the Council should take into account whether there was a risk that it might suffer damage to its reputation either by being a cause of loss of agricultural land or through the failure of the loan arrangement. In order to reduce this risk, it was suggested that a condition of the loan should be that the outstanding governance arrangements should be resolved. Another Member expressed support for the Great Fen Project, pointed out that the loan would further this aim and should be regarded as a financial transaction, which would bring benefit to the Council. The level of return the Council received in return for the loan would be greater than that which could be achieved by investment through financial institutions.

The Panel then discussed whether the Wildlife Trust should sell the land it was offering as security and use the proceeds to purchase the new land. It was, however, argued that if a loan was taken and repaid in the way suggested, the Wildlife Trust would eventually own both areas of land.

Having come to the conclusion that the Wildlife Trust’s request for a cap on the maximum level interest that was payable should not be granted and that alternatives to the flexible repayment arrangements should be explored, the Panel

RESOLVED

  that Cabinet be recommended to approve a loan to the Wildlife Trust, of up to £1.2M subject to:

a)  no cap being placed on the interest rate offered;

b)  the Director of Commerce and Technology and the Head of Legal and Estates being satisfied of the robustness of the terms and security ; and

c)  the approval of adequate governance arrangements for the Great Fen Project.