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Council pays out more than £3 million to cover losses at major shopping centre

24 Sep 2023 3 minute read
Friars Walk, Newport. Photo LDRS

Nicholas Thomas, local democracy reporter

Newport council has spent more than £3 million on subsidy payments to cover revenue losses at one of the city’s main shopping centres.

Backers hailed Friars Walk as the future of shopping in Newport when it opened in 2015, boasting big-name retailers and restaurants.

But a series of store closures, including several high-profile losses during the pandemic, have in some years activated subsidy payments of up to £500,000, as part of the Friars Walk sale agreement councillors signed off on six years ago.

That subsidy arrangement is tied to the number of vacant units at the shopping centre and is due to run for another nine years. A spokesperson for the local authority said the deal struck in 2017 “represented the best value to the council”.

Staggering

But Matthew Evans, the leader of the opposition in Newport City Council, called the sums “a staggering amount of money” and said he was “sure it is extremely unpalatable to the taxpayer”.

He added: “The agreement doesn’t end until 2032 – clearly the situation is dire, to put it mildly.

“This is money which could be far better spent elsewhere. For some context, the council only makes £20,000 a year from car parks at Fourteen Locks and Tredegar Park.”

The latest subsidy payout figures were published following a Freedom of Information Act request, seen by the Local Democracy Reporting Service.

Responding to Cllr Evans’ comments, a spokesperson for Newport City Council said that agreeing to the subsidy arrangement in 2017 had allowed the council to get more – not less – money for selling the shopping centre.

The deal “allowed the council to fully pay off its borrowing costs and meant it received an additional £8 million,” the spokesperson said. “Even if the full subsidy was paid for the 15 years of the agreement, it would be less than that £8 million – and for a number of years the full subsidy was not required.”

Signing the subsidy agreement also “ensures the council can take a ‘profit share’ of any increased rental income from the scheme” up to £7.5m if the shopping centre’s future is a prosperous one.

The council spokesperson added that the deal, approved by the full council in 2017, “represented best value as it allowed the council to fully pay off its borrowing costs of £82m”.

“As a result of the agreement to subsidise the rental income, £84.5m was received on completion of the sale,” they said. “If the subsidy had not been agreed, the value of the scheme would have been reduced and the repayment would only have been £76.2m.”


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Mab Meirion
Mab Meirion
5 months ago

Maybe AI will not be such a bad thing…

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