Questions raised over Council’s £0.5 million loan to Solar Farm

Questions have been raised over a decision by Bath and North East Somerset Council to agree, in-principle, to loan £500,000 of local tax-payers’ money to a company which is building a Solar Farm in the area.

Conservative councillors have voiced concerns that the half-million pound loan represents a potentially high-risk investment for the Council at a relatively low rate of return, and have questioned how the Liberal Democrat-run authority can afford to give away such a large sum of money at a time of tight finances and cutbacks to local services.

Research by the Conservatives has revealed that the credit limit recommended for the company by ratings agency D&B is just £15,000 – far lower than the £500,000 the Council is planning to lend.

The loan to the Solar Farm is being made using money from B&NES Council’s £1 million ‘Green Investment and Jobs Fund’, set-up in February.  However, questions have also been raised over the number of permanent local jobs that will actually be created by the Solar Farm – with the Council admitting it does not have figures on how many jobs will be directly created as a result of its investment in the solar farm, and stating only that the company currently employs just five people.

Conservatives have said that whilst they back measures to support local renewable energy projects, they are concerned that the loan may not represent the best deal for local taxpayers and needs greater scrutiny. The opposition group has therefore decided to ‘call-in’ the decision so that the proposed deal can be more closely scrutinised by a panel of Councillors.

Conservative Councillor Liz Richardson, who is leading the call-in of the decision, said:

“We fully support efforts by the Council to cut carbon emissions and increase the use of renewable energy in the area.  But it’s also extremely important that taxpayers’ money is spent wisely, especially at a time of tight finances and when the Council is cutting back on local services like public toilets and Early Years support. 

“We are concerned that the Council has not exercised due diligence before taking the in-principle decision to award this loan.  This should be done before the decision is taken, not after.

“It is highly unusual for the Council to make a loan of this sort and of this size to a private enterprise, and this clearly represents a potentially risky investment for a relatively low rate of return of 2.5%.  This compares to a return of 6.5% on other investments the Council has made in recent times.

“Indeed, a credit score from rating agency D&B recommends that, due to its risk profile, a prudent level of credit to this company would be for no more than £15,000 – yet the Lib Dems are planning to loan half a million.

“That’s why we believe it is important for this decision to be scrutinised further.”

Conservative Group Leader, Cllr Tim Warren, added:

“There are a number of questions surrounding this loan which clearly need answering.

“For example, why is it necessary for the Council to loan this money to the company rather than a bank?  And why were no other options considered for using this money in a way which supported the creation of a larger number of jobs, or generated a greater return for the Council?

“The Council could also have considered using this money for other renewable energy projects which benefit local people more directly, such as providing more home insulation, helping residents install solar panels on their homes, or providing money to local schools to install renewal energy schemes.

“This is a large amount of taxpayers’ money to put into what appears to be a risky investment, and residents would expect this to be more closely scrutinised.”

The call-in hearing is taking place on Monday 29th September at 10am at the Guildhall, Bath.