A MAJOR loan agreement between the council and a housing provider has sparked a political row.

Labour-run Warrington Borough Council’s cabinet approved plans for the council to enter into two loan facilities with Auxesia Homes Ltd at its meeting on Monday.

It will see the council enter into a £30 million, three-year term loan facility and a £7.5 million, two-and-a-half-year revolving credit facility with the housing provider.

Deputy council leader Cllr Cathy Mitchell, Labour, says the investment has been subject to a thorough due diligence process carried out by independent experts – and insists it is ‘not a blank cheque’.

She said: “This is an investment in affordable housing, which is in very short supply in the area.

“It’s fully secured against existing property — which means if our loan isn’t paid back in full, we take ownership of those houses, much like a mortgage.

“Auxesia Home is registered with the social housing regulator, and puts Armed Forces veterans, NHS workers and other emergency-services staff at the front of the queue for its affordable properties.

“We know there are some people who reflexively object to every investment the council makes.

“However, after a decade of austerity, and with Warrington coming in as the sixth-lowest-funded local authority in England, we have no choice but to develop other sources of income.

“The alternative is further cuts at every level, as returns on our investments help to run day-to-day services.

“If the Tory opposition wouldn’t make a fully-secured investment in affordable local housing, exactly what kind of investment would they make?

“And if they would rather we didn’t invest at all, which council services would they have us cut first?”

But the move has been criticised by the town’s Conservatives, the Opposition group on the council.

Cllr Ken Critchley, Conservative, said: “This is not a trivial sum that is potentially being loaned to Auxesia Homes Ltd.

“This is a council that has already borrowed in excess of £1.6 billion. This is an astronomically high amount of debt for a council with only £135 million of usable reserves.

“This debt is at an eye watering multiple of approximately 12 times the council’s usable reserves. Any increase in this level of gearing is hugely concerning.

“Of further concern is that the loan facilities that the cabinet agreed have not been subject to scrutiny by the wider members of the council.

“Many members may have a very different idea about what constitutes a prudent investment. At the part one session of the cabinet meeting itself, not a single question was asked by the cabinet members regarding these proposed loan facilities.

“Such lack of scrutiny only increases the risk of groupthink and optimism bias.

“We, the non-cabinet members of the council, have had no sight or input into the due diligence undertaken in relation to Auxesia homes Ltd or its shareholders.”