WHERE IT WAS SPENT: Trafford council has spent £336.87m on investments to date
Former Kellogg's factory in Old Trafford, Image: Panoramio
Trafford council has spent £336.87m on investments since July 2017 on a mixture of shopping centres, housing estates, an iconic central Manchester multi-storey skyscraper, an old sorting office and a former student village.
The authority’s investment strategy has previously caused concern for opposition councillors, who were worried that too much debt was being stored up for the future.
After the council invested £153m in property across the city region in 2019, Labour group and council leader, Coun Andrew Western, dismissed these concerns and said the critical comments showed a “concerning lack of understanding” about the authority’s investment strategy, which he argued prevents service cuts.
According to a recent accounts and audit committee report, the authority’s primary aim through its investment strategy is “to promote Trafford council’s strategic priorities while creating a suitable income stream to support local services.”
The council’s strategic aims are to build quality, affordable and social housing, support health and well-being, create successful and thriving communities, instil pride in the area and promote green and connected communities.
But where has that £336m gone?
Currently, the largest portion of Trafford’s investment portfolio is made up of £184.32m of development debt; money the council has itself borrowed to then lend to developers or other companies for the purpose of property development or purchase.
This includes £12.25m to developers Bruntwood for the former Kellogg’s factory site in Old Trafford, another £25.57m to Bruntwood for the joint purchase of three shopping centres across the borough, £60m to Castlebrooke Investments for the refurbishment of the CIS tower in central Manchester, £67.5m to the Hut Group and £19m to developers Salboy for their redevelopment of the former Castle Irwell student village in Salford.
In some cases, money has also been budgeted as commitments to the above projects, but has not yet been spent by the council, this totals £76.57m.
The next largest portion was spent on direct purchases, accounting for £79.92m of the investment budget.
This included the purchase of Altrincham’s Sainsbury’s for £25.59m, the Grafton Centre and Travel Lodge in Altrincham for £10.84m, a Preston property for £17.39m, the Fort in Wigan for £13.93m and Sonova House in Warrington for £12.17m.
Then, it’s equity investment, or shared investments with other bodies; making up £37.76m of the investment portfolio.
This includes the £16.69m investment in the Stamford Quarter in Altrincham, £12.25m in the former Kellogg’s factory site in Old Trafford and £8.82m in Stretford Mall.
Next comes treasury investment, or money given to central government through the purchase of government bonds, totalling £17.62m.
And finally, the council’s investment in development both in and outside of Trafford totalled £17.25m.
This included investment in the up and coming development of Sale Magistrates court for £4.8m, the redevelopment of Brown Street in Hale for £8.82m, development of the former post office sorting office at Lacy Street in Stretford for £96,000, a care home purchase for £2.23m and unspecified ‘various development sites’ for £43,000.
The council also made a capital investment in some offices off Albert Square in central Manchester last year, at a cost of £17.62m.
Last year, in the 2019-20 financial year, Trafford council gained a net income of £3.123m from its investment portfolio.
This financial year, 2020-21, that is expected to rise to £6.371m.
A presentation to the accounts and audit committee this week stated: “Originally approved in July 2017, with the objective [was] acquiring a balanced portfolio that would facilitate development and regeneration, support the council’s functions, and provide a sustainable income stream to support the council’s budget.
“In December 2020, the executive approved an updated strategy. The changes brought more emphasis to the ability of new investments to bring about both regeneration and social, economic or environmental benefit to the area and wider region, and produce an income that gives a financial return to the council.
“The updated strategy also allowed changes to regulations and market conditions to be factored in to the investment criteria.”
The total approved investment fund for Trafford council is £500m and is supported by prudential borrowing.
It used to stand at £400m, but this was raised by the council’s approval in 2020, despite opposition councillors’ concerns.
A spokesperson for Trafford council said: “Our Asset Investment Strategy has been developed to promote our strategic priorities, while also providing a steady income stream.
“We have done this by securing investment in assets which will allow support sustainable regeneration, deliver improved infrastructure and provide social, economic or environmental benefits to the area and wider region.
“To date, total commitments of £337m have been made and these investments also produce an income that gives a financial return to the council.
“Where this has required borrowing to finance the investment, this has always been done in accordance with CIPFA’s Prudential Code.”
Coun Tom Ross, executive member for finance, added: “For this financial year, we forecast our investments will contribute more than £6.5m. That money is reinvested into key services to support the most vulnerable people in our borough.
“It is important to realise that without that investment – which also supports our plans for regeneration of our town centres – we would not be able to provide that level of support.”
Words: Alice Richardson, Local Democracy Reporter
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