Councillors dismiss fears over charity’s £600k loan
A Leeds-based environmental charity has no plans to sell off properties, despite a merger which could potentially see it take on debts, a senior Leeds city councillor has claimed.
A panel of councillors met to discuss a merger of two council-affiliated environmental organisations – Groundwork Leeds and Groundwork Wakefield – which was given the green light at a recent Leeds City Council Executive Board.
Opponents of the merger wanted decision-makers to look again at the merger, claiming that Groundwork Wakefield owed more than half a million pounds to Wakefield Council, and that Groundwork Leeds could be saddled with debts that may force it to sell off property.
But both Leeds City Council and Groundwork Leeds officers said the deal would not put Leeds at a disadvantage, adding that Groundwork Wakefield’s existing income was more than enough to service its debt with Wakefield Council.
Leeds City Council Executive Board member Coun Mohammed Rafique (Lab) added that Groundwork Leeds’s current headquarters in Morley would not be used as a “security” for Wakefield’s loan.
Speaking to Leeds City Council’s Strategy and Resources Scrutiny Board, Coun Jonathan Bentley (Lib Dems) said: “As a trustee, it is the council’s primary duty is to work in the interests of Groundwork Leeds and protect it from unnecessary risk.
“When this paper, proposing a merger of three groundwork organisations, the first thing I looked for was a comprehensive risk assessment, and a focus on how the proposal affected groundwork Leeds – I could find no risk assessment.
“The review concluded that there was no reason for the merger not to take place, but that there was no immediate requirement to merge, as many achievements of the merger had been achieved already through collaborative method of operation.”
Although Groundwork Leeds is separate from Leeds City Council, the authority acts as a trustee for the charity.
Coun Bentley added: “Any trustee of an organisation faced with a choice of maintaining the status quo or going through with a financial and legal merger which had not been risk-assessed – and both choices have the same outcome – then maintaining the status quo would be the prudent option.
“The more I read the paper, the more it seems to be a decision in search of justification.”
He added that a Wakefield Council cabinet paper from October 2017 that mentioned a debt of more than £600,000, owed by Groundwork Wakefield to the council.
Coun Bentley added: “I suggest the paper shows Wakefield Council’s motivation for the merger, which isn’t necessarily in the best interests of Groundwork Leeds.”
He called for the merger to be considered again by Leeds City Council’s executive board.
Groundwork Leeds is currently headquartered at the environmental and business centre in Merlyn Rees Avenue, Morley. Coun Robert Finnigan (MBI) expressed concern that this building might be sold in future to help pay off Groundwork’s debts as a result of the merger.
He added: “We have significant concerns that if we don’t get this right, we will be straddled with a new organisation with a £600,000 debt and a fine building in Morley that is ripe for development.
“We have a concern that we are risking a lot and gaining very little – it is difficult to see what Groundwork Leeds get from this, other than being saddled with a significant debt.”
Adrian Curtis, an executive director at Groundwork, confirmed the Morley building was owned by the organisation.
He added: “Over the five years we’ve been developing these proposals, we have had 20 meetings – the main reason why Groundwork Wakefield was chosen is that Groundwork Wakefield owns an asset – Kirkgate Train Station, which is worth more than £1.2m.
“That is an asset that is held on a 99-year lease from Network Rail. The advice we had was that it would be easier not to transfer that £1.2m asset into a different entity.
“It was a decision made over a number of meetings.”
He added the Morley building was the main asset of the Leeds Groundwork Trust, while the Wakefield trust rented out office space at the train station for income, and holds two municipal golf courses, in Wakefield and Hull.
Coun Mohammed Rafique, Leeds City Council’s executive member for environment, said: “The report in October set out why merging improves resilience and sustainability.
“It supports operational efficiencies and expands opportunities for income generation. For the finances of the public sector and third sector organisations, you will see many organisations are going down this route.
“The Leeds asset will be part of the merger, but it will not be used as a security for the Wakefield loan.”
Mr Curtis added that it is “our intention to never dispose of the Morley building”, but added that it was a charity asset, and that charities must do what they have to to sustain operations.
The board agreed to release the decision for implementation, and not look into it further.