Labour councillors will today approve plans to provide luxury hotel Coombe Abbey with a £2 million bail out. Under the proposals the hotel will be able to borrow funds up to the value of £1.95m which is repayable over a ten-year period.
It’s the second time in just five years the Council has bailed out the hotel with a loan. In 2013 the Council actually borrowed money itself to provide the hotel operator with an undisclosed amount. Those funds aren’t due to be repaid until 2028 and the debt will run alongside the new payment.
The current proposal comes just months after the Council secretly purchased the business for £9m. The controversial deal was made behind closed doors and only came to light after it was leaked to the media.
Labour councillors insist the purchase could provide taxpayers with a 10% return. However, opposition councillors fear the venture is becoming a drain on public funds. They’ve questioned why it hasn’t been able to secure funding from the private sector and say the Council shouldn’t be running a hotel at all.
Conservatives maintain their belief that the Council should focus on reducing its debts rather than gambling on risky investments. Figures obtained by opposition councillors last year revealed debts in excess of £250 million - costing £13m a year in interest payments.
Commenting on the news Cllr Gary Ridley who is the Leader of the Conservatives at the Council House said; “I’m not sure what qualifies a local authority to run a hotel and they should never have purchased it in the first place. This loan is another example of poor leadership from this failing Labour administration which seems determined to put more taxpayer’s money at risk. They should ditch this Fawlty Towers fantasy as soon as possible and focus on their core mission of providing services to the people of Coventry. At the moment it feels more like a real life game of monopoly and it’s the people of Coventry who’ll pick up the tab.”
Once approval has been given to the proposal at Cabinet today it’ll need to be rubberstamped by all councillors at a meeting of Full Council on Tuesday 16th October. The resolution will give full authority to officers to finalise the deal and manage the loan facility in the future.