Down the drain

7 Sep

Sir Robin Wales is about to flush £40 million of council taxpayers’ money down the toilet.

Detail hidden in the draft accounts due to be signed off by cabinet tonight shows that the ‘loan’ made to help transform the 2012 Olympic stadium into West Ham United’s new ground is being written off.

Newham Council ‘invested’ £40m via a special subsidiary company called Newham Legacy Investments Ltd.

At the time, Mayor of Newham, Sir Robin Wales stated:

“Our investment of £40 million secures that legacy by transforming the Olympic Stadium into a world class attraction […]. This will provide us with a share of the profits generated over the long-term and a range of community benefits for Newham residents.”  

After just one season of operation as a football stadium the council is now ‘writing off’ that £40m investment. A line in the Draft Statement of Accounts 2016/17 states:

“Impairment totalling £44.4m of a Long Term Debtor in one of the Council’s group undertaking, Newham Legacy Investments Ltd” (page 12, item 7) 

and 

“The company’s 2016/17 financial results disclosed a loss of £2.5m (2015/16: loss of £41.6m), and net liabilities of £44.4m (£41.9m of net liabilities as at 31 March 2016).” (page 88, item 39)

Newham Legacy Investments Ltd has had a number of directors over the last five years including senior council officer Zoe Power (Head of Projects and Programmes, Newham) and Cllr Lester Hudson (deputy Mayor, Cabinet member for Finances and Chair of Audit board). Given that the audit board should scrutinise decisions made by cabinet, council and council-owned subsidiaries this combination of roles was a massive conflict of interests.

While Newham handed over £40m to convert the stadium, West Ham United themselves only contributed £15m, despite being owned by two multi-millionaires and the Premier League being the richest in the world.

The £40m being written off is double the amount of ‘savings and efficiencies’ being made this year. Residents were promised the investment would provide Newham with a share of the profits generated over the long term. It turned out be a gift to Messrs Sullivan and Gold. The money, borrowed by the council from the Treasury, will now have to be re-paid by local taxpayers.

This blog has regularly cast doubts on whether the other commitments including local jobs and tickets for residents have been delivered.

This is not Newham’s first Olympic investment to back fire. In 2012 it also had to write off more than £3m invested into London Pleasure Gardens. With additional liabilities added on, taxpayers were left close to £5m out-of-pocket.

All-in-all, Sir Robin’s track record on finance (under the ‘scrutiny’ of the double-jobbing Cllr Hudson) is not impressive.

Which makes this week’s news that Newham council has bought a multi-let office block in Redhill, Surrey for £25m all the more worrying.

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3 Responses to “Down the drain”

  1. scwalkermecom September 7, 2017 at 12:39 #

    This is really shocking news.
    We are facing cuts to services and our money is gambled away.
    £44 million could make a massive difference to our community. We have. I effective youth provision and. Holders are being killed on our streets.

    • scwalkermecom September 7, 2017 at 12:49 #

      We have no effective youth provision and children are being killed on our streets.

      Anger is making my thumbs mis-type

  2. Birdman September 7, 2017 at 14:11 #

    I hope everyone remembers that at the time, those of us who challenged the idea were denied a sight of the’business case’ and one councillor in particular, who I helped get elected, point blank refused to discuss it other than to say it was a good idea and I should trust his judgement. When councillor’s debated it, they were not given supporting documents until they were at the meeting and the documents were collected back in after the meeting. The decision to borrow £40m to support millionaire pornographers stank from day one. Many of those councillor’s who supported SRW at the time, including the councillor I helped elect, have gone on to receive tens of thousands of pounds in allowances for which many of them do sfa. Why anyone would want to remain a member of a Labour Party that supports, encourages and funds this shower is beyond me.

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