Questions over council spending on shopping centre deal

Nicholas Thomas, local democracy reporter

A council has been accused of ‘squandering’ money after paying £3.5 million in subsidies linked to a shopping centre over the past eight years.

Newport City council negotiated a deal with the owners of Friars Walk in 2017 that would top up income if the centre was not collecting enough rent.

Payments in each of the past six financial years have reached the maximum £500,000 – new figures seen by the Local Democracy Reporting Service show.

Cllr Matthew Evans, the leader of the Conservative opposition group, said he was “absolutely staggered that the council has squandered over £3.56 million of local taxpayers’ money on this”.

Benefit

A council spokesperson defended the deal and said the local authority would still benefit overall from the deal, even if the maximum £500,000 was paid out annually over the course of the 15-year deal.

The council received £8 million when it signed the deal, and would be liable to pay a maximum of £7.5 million in top-ups, they explained.

“It is important to note that as well as the rental subsidy, the arrangement ensures that the council receives additional rent payments if the centre’s profits exceed certain thresholds,” the spokesperson added.

But Cllr Evans said the deal to top up low rents involved money which could be better spent on council services.

“Think how many additional social service staff could have been employed, or potholes fixed,” he said. “I seem to recall when I questioned the decision taken by the cabinet at the time, I was told that it was merely ‘an insurance policy’ which would never be called on.

“Sadly the public have been picking up the tab for Labour’s failure to regenerate the city centre. The reopening of the former Debenhams site is good news, but more needs to be done and fast.”

Debenhams

A homeware store is reportedly set to open in part of the former Debenhams premises, which was described as the anchor tenant for the Friars Walk centre.

Debenhams’ high-street operations ceased in 2021 and the future of the large Newport site has been uncertain until the recent news of an incoming tenant.

Michael Enea, a Conservative Party campaigner and political blogger, has urged the council to consider what he called “huge” business rate charges for larger premises in the city centre.

“The former Debenhams site at £345,000 a year, the old Cineworld complex is £64,500 a year – these are astronomical figures,” he said. “No wonder vast swathes of businesses have moved to out-of-town retail parks. We need a total review of business rates in Wales whereby it becomes an incentive to trade in our town and city centres. Something has to change.”

The local authority spokesperson said Newport City Council is not responsible for setting business rates.

“We do, however, offer support for small and medium-sized city centre businesses through our local city centre rate relief scheme, which offers a discount of 25% on non-domestic rates for qualifying properties,” they explained. “Very small businesses already receive rate relief through the Welsh Government’s small business rate relief scheme.

“The Welsh Government also offers support for larger businesses through its retail, leisure and hospitality relief scheme, which offers a discount of 40 per cent on non- domestic rates, capped at £110,000 per business.”