Next week, Salford City Mayor, Paul Dennett, and his Cabinet are set to endorse a huge investment in the 'transformation' of Manchester Airport and London Stansted Airport.
Both airports are now owned by the Manchester Airport Group (MAG), which is looking for a £1.5billion investment from its shareholders to "secure future business plan growth and the longer term sustainability of the business".
Salford is one of ten Greater Manchester local councils that have a share in MAG. Manchester City Council owns 35.5% of the company and the other nine councils own 29%, with Salford Council's share being 3.22%. The remaining 35.5% is owned by the private Codan Trust Company (Cayman) Ltd (as trustee for IFM), registered offshore in the Cayman Islands.
The report going to Salford's Cabinet next week states that "there is an opportunity
for the Greater Manchester districts to provide shareholder loans" and that "the most cost effective means of securing finance for the loan will be identified".
Nowhere in the report is the actual amount of the loan specified, although the Council does have a figure of £10million set aside for 'Manchester Airport' in its capital budget for the new financial year 2018-19.
Given that the source of the loan has not yet been 'identified' it's not known how much it will cost to service it from the Council's revenue account which supports front line services, like the five nurseries the Council is currently proposing to close.
The report states that, in future years, the Council will get a "direct return on the loan", and that it "should enable future anticipated dividends to be paid". It adds that "Without the capital investment there is a very real risk that the level of dividend payable, which supports the council's budget, will reduce considerably in future years. This would lead to increased revenue budget pressures which would increase future savings targets".
The investment by Greater Manchester councils would be part of a £1.5billion 'transformation' that represents 'the most significant programme of investment ever made in Manchester Airport'.
This would include an expansion of Terminal 2, improvements to Terminal 3, links between the two terminals, better departure gate facilities and 'customer friendly enhancements'. Stansted Airport would get a new arrivals building. The investment, states the report, would "promote economic growth and employment opportunities".
The report concludes that "Any investment decision has to be underpinned by a thorough assessment of the risks involved and a robust due diligence process" and adds that "From the analysis and work carried out, on behalf of the GM authorities, this is deemed to be a reasonable investment".
It adds that "The risks of the potential stakeholder loan have been reviewed on behalf of the GM authorities" – but nowhere does it state what these risks actually are...
The decision will be made by the Cabinet next Tuesday – the same day that the City Mayor is due to be jetting off to the South of France to speak at the MIPIM property orgy event in Cannes (see here).