Carlisle Raffles Estate £15m revamp loan 'to cost more than £50m'

Carlisle's Raffles Estate (pictured in 2009) was originally built in the 1920s and 30s

A £15m loan taken out by a council to regenerate a housing estate 24-years-ago is still owed and is likely to cost more than £50m in total to repay.

Under Labour control, Carlisle City Council took out the interest-only loan, which is due to be fully repaid next year, to revamp Raffles Estate.

The Tory-run authority said the interest on the loan, which would need to be refinanced, totals £32.5m.

Labour said it had been "a good deal" at the time.

'Toxic debt'

At a full council meeting on Tuesday, deputy leader Gareth Ellis said the loan could not be paid off next year, would have to be refinanced and was likely to cost more than £50m in total.

"It is scandalous - we are a small district council with a revenue budget of around £11m a year," he said.

"It might not be paid off until the 2040s and ultimately it's been wasted. It's a toxic legacy of debt."

It is expected the council will have to refinance to pay off the loan

Raffles Estate was built in the 1920s and 30s but over time many properties became empty.

The loan was taken out in 1995 to spend on carpets and boilers in hundreds of homes, in a bid to attract new tenants.

However, Mr Ellis said the regeneration failed to do this and the buildings were later knocked down and rebuilt.

Labour spokesman Les Tickner said the loan had all-party support at the time.

He added: "[It] was taken out at a rate of 8.75% which was a good deal at the time.

"It's disingenuous for anyone to suggest that what has happened could have been predicted with interest rates - they'd be millionaires if they had."

Analysis

by BBC Cumbria political reporter Bob Cooper

The Conservative-led council is drawing attention to this because the decision to take out the loan was under a Labour administration.

But Labour argues it had all-party support and that, although 8.75% seems like a high interest rate now, it was good for the time.

The money was also used to pay off some debt and Labour says it "wasn't spent predominantly" on regenerating Raffles.

But Conservatives insist this represents "negligence" by Labour and has wasted tens of millions of pounds.