Andy Burnham's office rejects 'cosy relationship' claims over £120m loans for developer

The Greater Manchester Combined Authority says there was 'independent scrutiny' over the loans handed to the major developer

Andy Burnham’s office has rejected claims over huge loans it ‘rubberstamped’ for a developer with which it has ‘a cosy relationship’.

The Greater Manchester Combined Authority (GMCA) is in court over two loans to special-purpose vehicle companies controlled by Daren Whitaker, the boss of Renaker. The firm built notable city centre skyscrapers like Deansgate Square.

Renaker was loaned £615m by the GMCA’s housing investment loans fund which was established in 2015 to help developers build 10,000 homes across Greater Manchester.

No loans have been defaulted on and the fund is closed for new applications.

Now a court case, brought by major city centre landowner Aubrey Weis, is challenging the two organisations' relationship, arguing it breaches the Subsidy Control Act.

The case has wound up in court at the Competition Appeals Tribunal in London.

Both the GMCA and Mr Weis’ legal teams agree no due diligence was carried into Mr Whitaker and his financial position over two loans worth £120m for Renaker’s Trinity Islands and Contour skyscrapers, but the GMCA insists it has ‘independent scrutiny’ of every loan.

Joseph Barrett KC, appearing for Mr Weis, said: “It can't possibly be right to be conducting a lawful assessment of creditworthiness without looking at all into the creditworthiness of that individual if he is what you're relying upon. That just can't be right.”

But Aidan Robertson KC, appearing for the GMCA, said it was ‘reasonable’ to take the ‘proposition’.

He told chair Hodge Malek KC: "Whilst there is no parent company or personal guarantee from Mr Whitaker, we do have cross-collateralisation to a certain extent, that's between the two borrowers, you've got additional security on properties falling outside the two projects.

“It's a reasonable view to take that this is a commercial proposition. That is the approach that the authority's taken and has withstood external scrutiny from the gateway panel and the scrutiny committee from people who are highly experienced in this industry."

Mr Robertson also argued the GMCA has processes in place to stop the ‘wool being pulled over its eyes’ and prevent borrowers receiving ‘favourable’ interest rates, with an independent panel appraising each loan application before it ultimately goes to a GMCA committee chaired by mayor Andy Burnham.

“It has been explained to [independent panel members] if they think it's way below market rates you can expect them to say so,” he added.

“The role is to provide independent scrutiny and say to the authority we are not getting value for money.”

He also batted off suggestions the panel did not scrutinise the ‘pricing’ of the loans, thought to be charged at an interest rate of 8.95pc and 8.65pc for each loan. He went on: “The [independent panel members] are not proceeding on an initial appraisal.

“There has been a detailed presentation to them. They have before them and an investment proposal.

“Just because there's no reference in the minutes does not mean the panel ignored the issue. They were specifically briefed on it.”

The case is expected to conclude next week and a ruling handed down at a later date.