This week Blackpool Council reached into its pockets once more to buy a key asset for the town.
A price tag of £4.25m to buy Blackpool Airport might seem like a good deal - but it comes as the authority seems to be splashing out all over town to invest in new projects.
Currently millions of pounds is going towards a new conference centre, the second phase of the central business district and upgrading the tramway.
The council’s contribution is often match funding grants from other sources, and it uses ‘prudential borrowing’ which means it gets more favourable interest rates than commercial business, but must still have a sustainable business plan.
Yet, while it is spending on the one hand, the authority is pleading poverty on the other hand with jobs lost and services reduced due to budget cuts totalling £118m over the past six years.
Some schemes seem to have faltered, with for example, empty units still on the ground floor of Bickerstaffe House, the council’s £20m town centre office block.
Meanwhile a meeting of the council’s audit committee on Thursday heard reserves have now dipped to £2.5m from a recent total of £6m.
So is the council being irresponsible by borrowing millions of pounds, or is this astute financial management which will grow the resort’s economy?
Coun Paul Galley, chairman of the council’s audit committee, admits ‘the stakes are high’ but says it is important to have a financial say in the future of the town.
Although a member of the Conservative opposition group, he leads a committee whose role is to scrutinise all the council’s spending.
Currently the town hall can borrow in the short term at a rate of 0.2 per cent, while long term loans are estimated to have interest rates around the four per cent mark and are on a fixed term.
This is a fraction of what a private business may have to face in interest.
Coun Galley said: “Everything the council borrows for, it must get a financial return for.
“For each loan, the council must demonstrate a business case that shows it can be paid back.
“The rates are manageable if it’s the right investment to generate revenue.
“It’s also important to have a good treasury management plan, and we seem to be doing well at that.
“This is when the council borrows money at a lower rate to pay off a long term loan which is being repaid at a higher rate.
“But the council can’t keep doing this forever, particularly if interest rates start to go up.
“It is a concern, but they are confident with the right plan, they can stay on top of it.”
The council chooses projects which it believes will help the success of Blackpool’s economy.
Encouraging growth will also help the council collect more business rates which in future will be retained by local authorities instead of central government.
Coun Galley has questioned some council investments including the management of units on the ground floor of Bickerstaffe House, part of the central business district.
He would like to see rents reduced and homegrown businesses given chance to take up two empty shops.
He said: “Sadly Blackpool suffers when something happens to a national chain, and for example we lost BHS due to that.
“Yet in many of our local shopping areas, independent retailers are doing well, for example on Anchorsholme Lane and Highfield Road.
“I’d like to see the council reduce the rents on these town centre units it owns and enable people from Blackpool, starting their own businesses to move into them.”
But council leader Coun Simon Blackburn says cutting rents is not the answer.
He said: “We are currently negotiating with several companies who have expressed interest in taking the remaining units in the central business district.
"As ever, we balance the desire to fill it quickly, or with pile it high, sell it cheap retailers with cheapening premium units in the middle of a business district that is about to expand.
“Cheapening the rents means that the council tax payer loses out, particularly when the second phase of the business district with the tram extension and hotel, has been built and footfall continues to increase."
Coun Galley has also challenged the hotel plan for the Wilkinson’s site.
He said: “Personally I would prefer a bus station but the council believes the hotel can work and pay a good dividend.
“But if it doesn’t work, there is a big loan to pay back. The stakes are very high.”
But Coun Blackburn said: "The business district has already improved the look of the entrance to Blackpool and has brought over one thousand jobs into the town centre.
"Those employees are spending their money in the surrounding businesses which in turn supports more local families.
"The second phase of the business district will bring in even more workers and tourists to the area, which will make these units even more attractive – so it is really important that we hold firm in order to get the best deal for the taxpayer.”
Speaking when the council’s budget for this year was finalised, Coun Blackburn said it was right to borrow on locked-in rates to pay for infrastructure and improvements that private sector businesses could or would not do.
He said: “As a council we have the ability to borrow at a lower interest rate than others.
“We need to take this opportunity and use it to our advantage, both to invest in key infrastructure and help businesses in the town to expand whilst guaranteeing the council an income.
“The new tramway will do this, as will the conference centre, as would new high-end hotels, as would new retail, leisure and tourism facilities, as would improved transport links.
“Investing now is absolutely vital to our future to create jobs, to boost visitor numbers, boost the economy and secure future income for future generations.”
PANEL: Slow start
Blackpool’s Central Business District saw a major investment to revamp a key part of the resort.
It features Bickerstaffe House – which is occupied by the council, with a coffee shop on the ground floor – a Sainsbury’s supermarket and the new-look Talbot Road multi-storey car park, with gym and all-you-can eat buffet on ground floor.
The next phase of the development will see the addition of a four-star hotel and new tram station at a cost of £31m.
But the slow take-up of retail units was branded ‘disappointing’ in 2015, amid fears over a lack of interest in the site.
It was two years after work was completed that the announcement came in October 2015 that a new gym was to take over the vacant units beneath the car park and the delayed opening of Mr Basrai’s World Cuisine followed soon after in December.
However, vacant units still remain at Bickerstaffe House.