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Concern over £4.4m council loan to company it owns

Sharon Edwards
Political Reporter, Lincolnshire
BBC A head and shoulders photograph of Councillor Jill Makinson-Sanders. She is wearing a black top and has a necklace made of red beads.BBC
Councillor Jill Makinson-Sanders said the situation is "shocking"

Concerns have been raised at a Lincolnshire council about a series of loans totalling £4.4m.

East Lindsey District Council made the loans to a company it set up to run some of its services, but just £521,828 has been repaid so far.

Council leader Craig Leyland said: "It's all being repaid with interest".

But opposition leader Jill Makinson-Sanders described the situation as "shocking".

A head and shoulders photograph of council leader Craig Leyland. He has black glasses, a bald head and a grey beard. He has a pink shirt on and a multi-coloured tie under a blue suit jacket.
Council leader Craig Leyland said the company is expected to make a profit

The council set up company Invest East Lindsey in 2020 to build new homes, develop an eco-lodge business in Skegness and operate the Kingfisher Caravan Park in Ingoldmells, a holiday park which is owned by the council.

Five loans totalling £4.41m were made between 2020 and 2022 at a 4% interest rate.

The original terms was two years, but £3.89m is still owed after the company was given an extension to make repayments.

An internal council report said all three initiatives had been hit by rising interest rates and costs, and the impact of the Covid pandemic. The eco-lodge project was abandoned altogether.

A photograph taken outside the main doors of East Lindsey District Council showing the council's logo. The building is grey, with a bright orange panel to the left of the main entrance.
East Lindsey District Council is the sole shareholder of the company

In a report, the council's external auditors KPMG said it had found "significant weaknesses" in the handling of Invest East Lindsey which had made losses of £474,000 in the year ending March 2024.

Cllr Leyland said: "The Liz Truss budget and the immediate hike in interest rates" meant that the loans had to be renegotiated, but he is "confident" that the loans will be repaid in full.

But, speaking at a special meeting of the council's audit and governance committee, Cllr Makinson-Sanders said the council had been "shamed".

"We are here to protect our ratepayers and I don't think we have done that properly," she said.

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