The Director of City Development submitted a report which sought the Board’s approval for Leeds City Council to provide a loan to Leeds Culture Trust (LCT) for the purposes of providing cash flow assistance to cover claims to HMRC for both Theatre Tax Relief and Museums and Galleries Exhibition Tax Relief for financial years 2022-23 and 2023-24, with the report noting that any loan provided would be repaid by LCT upon their receipt of Cultural Sector Tax Relief.
In presenting the report, the Executive Member highlighted that the provision of such a loan would allow LCT to maximise the amount of funding it could invest in LEEDS2023 in-year. In addition, it was emphasised that both LCT and the Council had respectively sought their own legal and financial advice in relation to this matter.
A Member raised concerns and confirmed their disagreement with the proposal, highlighting the risk involved for the Council, in the event that the proposed loan was not repaid.
Members discussed a number of areas relating to this matter including the level of funding which had been provided by the Council towards LEEDS2023 and the impact of national financial challenges upon the delivery of the initiative. As part of the discussion the provision of respective legal and financial advice to both the Council and LCT was reiterated. It was also further emphasised that the loan would allow LCT to maximise the amount of in-year funding it could invest in the programme.
Responding to a Member’s specific enquiry regarding the risk involved, it was acknowledged that there were almost certain risks arising from the Council not providing the loan in terms of the potential impact upon the remainder of the LEEDS2023 programme. Conversely, with respect to the loan, it was confirmed that, although the level of risk to the Council is considered to be low, should the tax relief not be received by LCT, then the return of the monies advanced by the Council would be at risk.
Following consideration of appendices 1 - 3 to the submitted report designated as being exempt from publication under the provisions of Access to Information Procedure Rule 10.4(3), which were considered in private at the conclusion of the public part of the meeting, it was
RESOLVED –
(a) That approval be given for Leeds City Council to provide an unsecured interest free loan to Leeds Culture Trust to a maximum value of £1,845,407 which would, subject to the resolutions below, be payable in 3 instalments;
(b) That approval be given for Leeds City Council to pay a first instalment of £960,831 to Leeds Culture Trust in October 2023 for a term of up to 6 months, in order to cash flow the Trust’s Theatre Tax Relief claim for the financial year 2022-23;
(c) That in principle approval, which is subject to further due diligence on LCT’s financial position in November, be given for Leeds City Council to pay a second instalment of £366,571 to Leeds Culture Trust in November 2023 for a term of up to 13 months, in order to cash flow the Trust’s Theatre Tax Relief claim for the financial year 2023-24, and a third instalment of up to £518,005 to cash flow Museum Galleries and Exhibition Tax Relief (MGETR) for the financial year 2023-24 for a term of up to 13 months; with the payment of the third instalment being subject to a further assessment by independent advisors;
(d) That approval be given for the necessary authority to be delegated to the Director of City Development, to enable the Director, in consultation with the Chief Officer Financial Services, to enter into a loan agreement with Leeds Culture Trust on the terms as set out within the submitted report / resolutions above;
(e) That the decisions taken in relation to this report be exempted from the Call In process, due to matters of urgency and for the reasons as set out in section 47 of the submitted report, as any delay would impact upon the Year of Culture programme and seriously prejudice the public’s interests.
(The Council’s Executive and Decision Making Procedure Rules state that a decision may be declared as being exempt from the Call In process by the decision taker if it is considered that the matter is urgent and any delay would seriously prejudice the Council’s, or the public’s interests. In line with this, the resolutions contained within this minute were exempted from the Call In process, as per resolution (e) above, and for the reasons as detailed above and as set out within section 47 of the submitted report)
(Under the provisions of Council Procedure Rule 16.5, Councillor Lamb required it to be recorded that he voted against the decisions referred to within this minute)