Castle Quay, Banbury value drops in value again - a councillor says information was 'buried'

Cllr Ian Middleton (Green) said the £4.2m drop brings the combined losses on Castle Quay to £89.8m – 67.5 per cent of the £130m invested in the shopping centre and waterside development since 2018.

During the Audit, Accounts and Risk Committee meeting at Cherwell District Council (CDC) last week, Mr Middleton - Deputy Leader of the Opposition - raised questions about the valuations and why the figures had not been published as part of the draft accounts for 2022/23 or in the completed accounts of 2021/22, even though they had been included in the 2020/21 accounts.

He said the 2020/21 accounts were currently not visible on the council website as the link is broken. The current valuation figures are available in an appendix to 2024-25 Budget Setting papers.

Cllr Middleton has previously accused the council of ‘re-writing history’ over claims the Castle Quay investment was never intended to generate revenue.

"Minutes of the Budget Planning Committee from July 24, 2018 clearly state Castle Quay was an ‘opportunity to invest in property for commercial purposes’ and ‘the purchase of the site was principally as an investment’ which would ‘generate significant revenues in excess of £5m per year’ that would ‘contribute to the wider costs of our services for all our residents’,” he quoted.

“This year, in a change to accounting procedures some investments, including Castle Quay, were re-classified solely as regeneration projects.”

Mr Middeton had a ‘heated exchange’ with CDC Deputy Leader and Portfolio Holder for Finance, Cllr Adam Nell, with Mr Middleton claiming this was because the council had finally admitted the purchase of Castle Quay was a mistake and would never produce a return for council tax payers.

Mr Nell told the Banbury Guardian: “The truth is that we bought the 85 per cent that we didn't already own because if we had not there was a threat that the owners would have shut it down, left it in the dark, and Banbury town centre would not have been a viable place to do business. Other businesses would have closed and Banbury would have been a ghost town.”It's why we built the hotel and the cinema and the supermarket.”

Mr Middleton said if this were the case, why had the council not bought the centre for a peppercorn payment rather than paying £68m for it.

“Considering I’ve been told for several years the purchase of Castle Quay wasn’t a commercial investment, despite clear evidence to the contrary, it’s interesting that it’s now been re-classified as only a regeneration project.

"To be re-classified it must have previously been classified as something else. And it was – it was classified as an investment likely to produce a return.

“Re-classifying it now is a tacit admission that its original strategy was a mistake, in view of the fact that it’s now lost over 67 per cent of its combined value and can’t demonstrate a return for council-tax payers on a day-to-day basis.

"The council didn’t need to buy the centre and could have worked with the original landlords, rather than risking public money on an investment they clearly didn’t understand the implications of.”

Mr Middleton said the council has saddled itself with nearly £90m of negative equity using borrowed money underwritten by council-tax payers.

Mr Nell said: “The council has not made any ‘admissions’, tacit or otherwise. The reduction in value is broadly in line with the fall in the value of such assets around the country as a result of factors like the growth of internet shopping, the disruption caused by the Covid pandemic and home working.

“These reductions in value are paper items only. They will not in any way affect the council’s cash flow or lead to an increase in the Council Tax, they are just an accounting change in the value of the Castle Quay developments in the council’s books.”

Mr Middleton said: "Cllr Nell’s blasé dismissal of that as nothing to be concerned about quite frankly beggars belief. What else could the council have done with that £90m rather than blowing it on an investment they couldn’t afford and didn’t need to make and have now admitted in a roundabout way was a mistake?

“This may explain why the council has chosen not to include the current valuation of the centre and the waterside development in the current statement of accounts or in last year’s statement despite having done so in the previous year.

"I had to search through 20 appendices to find the figures buried at the end of the agenda item for budget setting at the full council meeting in February. It’s concerning that these figures have not been made available in the same place as they have in previous years and one has to ask why,” he said.

Mr Nell said: “The council’s formal accounts are a complex technical document prepared according to accounting rules. What is in them is the result of those rules. Nobody is trying to hide anything. Indeed, Cllr Middleton appears to have found all the figures he needed to make his comments.

"Cllr Middleton frequently confuses the fact that Cherwell District Council does get some rent from the shops at Castle Quay with the idea that CDC purchased Castle Quay solely as a commercial, money-making investment. The council’s aim was to keep Banbury Town Centre alive and (hopefully) revive and regenerate Banbury Town Centre.

"To answer his rhetorical question, the council did not simply buy the other 85 per cent of Castle Quay for a peppercorn because its then owner was not willing to sell it for a peppercorn.”

He said the 2020-21 links to the accounts was being fixed.