THERE’s a generally held belief among my colleagues that people who work with words struggle when it comes to numbers.

The scratching of heads and counting on fingers that seems to happen when it’s time to do expenses would seem to indicate that’s the case.

So when it comes to numbers and hard sums, most journalists find themselves having to rely on experts – those people who know their way around a balance sheet, can add up and can draw financial conclusions.

In Warrington, we are fortunate to have two of those people in the form of Chris Haggett, a retired chartered public finance accountant, and Richard Buttrey, a retired accountant.

Messrs Haggett and Buttrey have both taken a keen interest in Warrington Borough Council’s bid to enter the world of enterprise banking by stumping up around £30million to buy a third stake in Redwood Bank, apparently borrowing the money to buy in to the venture.

The council’s 2017/18 accounts are yet to be signed off following a complaint while the council has also received an objection to its 2018/19 accounts.

Grant Thornton – the council’s independent external auditor – is also being asked to rule on whether the council was acting imprudently when it invested the last two £10m investment tranches ‘in the full knowledge’ that the auditor was still considering the legality of the first £10m investment.

Mr Buttrey said: “There are many questions concerning Redwood Bank that have gone unanswered by the council, not least the basic conundrum as to why WBC has contributed almost 90 per cent of the bank’s capital but only have a 33 per cent shareholding.”

Indeed, that is a good question, and one I and the council tax payers of Warrington would like answering.

The story moves on a little this week with Chris Haggett confirming Redwood’s accounts for the calendar year 2018 are now shown on Companies House.

My thanks to Mr Haggett for taking the time and trouble to plough through the accounts on our behalf, and he has summarised the position as thus:

  • For the second year running, Redwood has delayed filing accounts until the deadline day of September 30, keeping them out of the public domain for the longest possible time
  • The accounts show Redwood incurred a loss of £3.8m in 2018, this followed a small loss in 2016 (when it started trading) and a loss of £3.6m in 2017 – it has been a loss-making company for a period of 28 months
  • The council had foreknowledge of the 2018 figures, yet stated recently that it was 'pleased with the performance of Redwood Bank in the first two years of trading and it continues to perform well in line with its original business plan'
  • The accounts state that total equity attributable to shareholders at December 31 2018 was £15.4m, making the council's 33 per cent stake worth just £5.1m compared with the £20m it had invested up to that date
  • Even more worrying is the auditor's statement that 'as we cannot predict all future events and conditions, we cannot guarantee that the company will continue in operation'
  • The council has borrowed the £30m for this investment, and is paying interest on that loan of some £1m a year – there is no income to offset this from the venture, as its audit committee agreed to take no dividends for five years.

Can we be sure that Redwood will even be in existence in five years?

Mr Haggett then asks a more than reasonable question: “If Brexit uncertainty is causing the auditors such vexation in relation to the Redwood investment, what effect can it be having on the rest of the council’s borrowings, which now totalling more than £1billion?”

That truly is the billion pound question, and one I would be delighted to hear the answer to.