The Labour cabinet is set to give the go-ahead for Hastings Borough Council to fund the building of a hotel for an international hotel chain on Cornwallis Street car park. The scheme has turned out to be an utter disaster and will put more short-term financial pressure on the council which it can ill afford.
Labour originally approved the scheme back in October 2019 when interest rates were low and estimated build costs were £7 million. The 2019 report made everything sound rosy and financial calculations in the report predicted big profits for the Council. “Borrow cheaply and receive guaranteed rent for at least the next 25 years”, the report said.
Fast forward to September 2023 – interest rates and inflation are high. The new report, which will be presented to the Labour cabinet next week, asks councillors to approve new capital expenditure of £13.6 million in order to build the hotel – almost double the original estimate. If the Council had to borrow this sum it would mean residents would be subsidising the hotel for the next 54 years.
The answer is obvious, isn’t it? Don’t build the hotel. Unbelievably, this is not an option as the Council has entered a binding contract with the hotel chain. Pressured by the hotel chain in to making a fast decision back in 2020, which was then ratified by Labour councillors in January 2021, the exit clause is allegedly so punitive the Council has no choice other than to see the scheme through to the end.
A bit of “shuffling the deckchairs on the deck of the Titanic” financial juggling will just about make the scheme viable in the long term, but at what cost? If you remember last month, it was agreed the Council would sell off some assets, notably the hugely over budget York Building project, to help balance the books. The Council will now have to sell some of these assets to subsidise the hotel building costs.
Money from the capital disposal programme could have been used to help subsidise the purchase of property to assist lessen the spiralling costs of providing temporary accommodation. Instead, it will be used to subsidise the building of a hotel for an international public company.
Most of the reports and paperwork for the scheme, including the legally binding contract, are shrouded in secrecy. Most of these reports end up in something called “Part 2” discussions which exclude the public because the information is commercially sensitive and some of the financial decisions are made behind closed doors without public scrutiny.
The scheme is an unmitigated financial disaster and questions need to be asked who was responsible for approving such a binding contract and why they aren’t resigning immediately.
