Council defends £600k loan to bailout sports stadium

The council has been criticised for bailing out the struggling Salford City Stadium Photo: PA

Salford City Council has defended its decision to borrow £600,000 to bailout a struggling sports stadium, despite previously telling ITV Granada that taking out bank loans while making millions of pounds worth of cuts was 'untenable'.

Mayor Ian Stewart has authorised an emergency loan of £600,000 to help the Salford City Stadium, after the company behind the ground recorded a loss of £4.3m in 2012.

The stadium is part-owned by the City Council along with Peel Holdings, who've also put forward £600,000.

But in December, Mayor Ian Stewart suggested that borrowing money from the bank at a time when council funding from central government was being slashed would be irresponsible.

He was speaking after the council's refusal to help bail-out struggling Super League club Salford City Reds, who in late 2012 were facing a winding-up petition over unpaid taxes.

Mayor Stewart justified the decision, telling me:

"Salford City Council has had £80m taken away from it by the government over the last three years, we have shed 1000 posts.

"Salford City council would have had to borrow £750,000 [to help Salford City Reds] because we have no money within our budget to do that, so the decision was that it was untenable to borrow that money to loan in then to the Salford City Reds."

The council is still owed £20m for building the stadium, and is already owed £1.5m by the Salford City Reds who play at the stadium. Earlier this year the club were taken over by millionaire businessman and horse race owner Dr Marwan Koukash.

The council has defended the decision, describing the £1.2m bail-out as 'a win-win'.

In a statement, it said:

“This loan does not have any impact on the delivery of council services. The city council has been able to borrow at an extremely low rate of interest and the loan will be paid back to the council with interest at a much higher rate.

"This makes good economic sense for council taxpayers and represents a sound investment in the future of a showpiece facility in Salford."The leader of the Conservative Party on Salford Council, Karen Garrido, has described the decision as 'immoral' and 'appalling' with the council making £16.5m cuts this year.

No one from the Mayor's Office or the City Council was available to speak on camera.