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BCP Council under fire for £54m beach hut loans plan

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BCP Council’s administration has come under fire for proposing to use beach huts, such as those at Mudeford, as collateral for loans to invest in the area.

Conservative leader Cllr Drew Mellor defended the tactic of borrowing against their value, foregoing future rents to achieve an immediate payment, writes Trevor Bevins of the Local Democracy Reporting Service.

At a meeting of the overview and scrutiny committee, he promised control would stay in the hands of the authority with the extra, upfront income being available for further investment in the beach huts.

The BCP Council proposals raised fears about the future ownership of beach huts
The BCP Council proposals raised fears about the future ownership of beach huts

If the proposal went ahead, the council would lose annual net payments of over £3m a year from the huts, he said, but gain up to £54m.

A cabinet report for next year’s budget explained it would work through the creation of a special purpose vehicle (SPV), which would be wholly or majority owned by the council.

That would purchase the beach huts at market value, possibly with the help of a loan from the council, and go to the market to meet the rest of the cost. The paper estimated this could give the council £54m.

The SPV would use income from rentals towards repaying loans, maintenance and repair costs, taxes and fees.

The cabinet report said the council could bring the SPV to an end once the debt had been cleared and return the assets to council control or refinance them again.

However, it has sparked written questions about the scheme in parliament by Christchurch MP Sir Chris Chope.

Cllr Lesley Dedman, of the Christchurch Independents, said that although the arrangement might be common in the business world, the council would have problems persuading Mudeford Spit beach hut users that it was a good idea.

“I find it very disturbing,” she said. “A resident told me it was paying for things on the never, never and I think it will cause problems when you try and put this budget through.”

Cllr Mike Cox, the Liberal Democrat member for Christchurch Town, described the proposal as “a financial wheeze”.

“We are only borrowing to pay for the deficit in council spending,” he said. “It is covering up failings to make proper savings.”

But Cllr Mellor said: “The risk is negligible,” promising a better service for beach hut users. “It’s 20 years of money upfront for less costs.”

He added: “I passionately believe we can be the best place to live, work, play in the UK and Europe, but we need to invest in it.

“This is the time to put our place on the map.”

He says that with low debt, compared to other councils of a similar size, borrowing to invest was a sound strategy.

Councillors later heard that gross income from the BCP beach huts was £6.1m a year.

The committee approved a recommendation for the cabinet to develop fall-back plans should any change in government regulations block the beach hut plan.

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