AN EXTRA £2million of taxpayers’ money was ploughed into the failed Red Lion Quarter project to plug a shortfall from one of the funding partners.
Boston College was supposed to have provided the money at the start of the project but an “issue” with it receiving the funding meant the money was not available and South Holland District Council stepped up to the plate to bridge the gap.
But it has been revealed that further problems with the college’s lease for its use of the controversial building mean the money is still sitting in a “ring-fenced” account.
In the meantime the council has lost out on the interest it would have earned had the £2million remained in its own account.
And the college, which is currently in the process of buying the freehold on the building, has never had a formal lease for its use of the teaching facilities and the Sage Restaurant it currently occupies.
It does pay a monthly service charge but the amount has been kept confidential by the council.
Council leader Gary Porter said: “At the start of the project there was an issue on getting them on a formal lease.
“It was just another item on the list of things that weren’t done properly at the start – there’s no way they should have been allowed to occupy the building without the paperwork.
“But I’m not worried about that now because the college is going to buy the building.”
He also added that the council will get its £2million back in addition to the undisclosed sum it will pay for the freehold, but revealed that the council is unlikely to recover the interest it has lost.
He said: “The money was originally taken out of our reserves.
“We will have lost some interest but in the great scheme of things it will be negligible because we do not have money in any risky accounts so the interest rate would only be about half to one per cent.”
But Jason Rooke, president of Spalding and District Area Chamber of Commerce, said it was a “ridiculous” situation and that one per cent interest on £2million equalled a loss of £20,000 for the council in a year.
He said: “It’s just another thing that was done wrong. It’s not the end of the world if the council get the money back, as long as the college doesn’t use it as a bargaining tool when it comes to buying the building.”