Newcastle City Council criticised over third loan to hotel

The council first agreed a £15m loan in 2013 to build the four-star hotel

Newcastle City Council has given a third loan to a struggling hotel after already issuing it almost £30m.

Civic chiefs gave the funding to the Crowne Plaza Hotel in the Stephenson Quarter, behind central station.

The Labour-led council said the loan was on commercial terms and from a fund to help businesses through Covid-19.

The move has been criticised by the Liberal Democrats, who said taxpayers should not be left "carrying the can" if a hotel could not continue to trade.

The undisclosed sum was awarded through a £5m Rescue Loan Fund.

In 2013, the council agreed a £15m loan to build the four-star hotel before it received an extra £14.8m in 2019, the Local Democracy Reporting Service said.

'Significant doubt'

The hotel changed management last year, with owners Clouston Group bringing in US leisure firm Interstate Hotels & Resorts.

Financial accounts published last December for Stephenson Hotel Limited, a subsidiary of Clouston Group, show it lost £3.2m in 2017 and more than half a million pounds in 2018 and stated there was "significant doubt upon the company's ability to continue as a going concern".

Robin Ashby, Lib Dem, called for "urgent" proof that the new loan would provide value for money.

"The Labour administration must recognise that taxpayers will have legitimate concerns about whether the hotel has a robust business plan to see it through the current crisis," he said.

Joyce McCarty, deputy council leader, said that "every penny" of the loan was accounted for.

"There is always a thorough assessment carried out before a loan is made," she added.

The council has previously said the rescue fund, which has not been open for bids, would come from "surplus cash balances" and be backed up by the local authority's reserves.

"For reasons of commercial sensitivity we are unable to comment further on this," a spokesperson said.

The Clouston Group has been contacted for comment.