Questions have been asked about whether a £10m investment by Wirral Council was “good use of council money.”
The issue was raised during a discussion of Wirral Council’s investment in a social impact fund with Altana Wealth Management and Warrington Council. This investment was made in February 2020 contributing £10m to a total £46m in the fund.
According to a Wirral Council report presented to the audit and risk management committee, “the fund aimed to invest in projects with UK businesses to improve the lives of UK residents. Investment would be considered in areas such as social housing, renewables, forestry, local lending vehicles and any other investments that are deemed to have a high social impact.”
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The investment is for a minimum of 10 years and can be extended for another two. The report said only £10m has been invested so far in a community bank tackling financial exploitation though a second investment into a company that installs solar panels on roofs has recently been finalised.
However progress to find companies was slowed due to the pandemic and the wider economic downturn in the UK. As a result, the deadline to find investments has been extended to January 2024 with a number of possible investments into other companies working in renewable energy.
So far, £80,000 has come back though it is expected to increase as money is invested into other projects. However this 0.4% return was criticised by chair of the committee Cllr Jenny Johnson.
Cllr Johnson said: “Do you think that’s a good use of council money? A lot of it is not invested anywhere whatsoever. They can’t seem to find the places to invest this money and it seems to me this money could be invested far better elsewhere and we seem to be tied in now to a ten year deal.”
Senior finance manager Pete Molyneux said there was a lag but added: “The first two investments will see close to 10% returns on those two investments. That will be higher than what we would get in a normal investment and it’s over the average of the life of the scheme. If we can’t get it invested, the money comes back to us.”
Finance director Matthew Bennett added the investment should be judged over the whole ten years, adding: “These things do tend to grow over a period of time and it’s probably unfair to judge the value of that investment and the return on it over such a short period.”
He also said the council was “looking at this with the benefit of hindsight” as the investment was made when interest rates were low. Inflation, which is the increase of prices over time, is now 8.7%.
Cllr Stuart Kelly also said the question for the committee was whether councillors were aware of the risk of exposure at the time, adding: “It’s not a question of could we see 18 months ago there would be an interim Prime Ministership (Liz Truss) of someone intent on squeezing the hell out of the economy, ensuring inflation and interest rates rose and there was going to be murder.”
He added: “It’s still the case that there is a return so the only question in my mind is always going to be what was our exposure, what was the risk ever going to be?” He said there was no risk as the money invested by the council will come back even if it isn’t invested.
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