£5m purse to save key cultural centres
EMERGENCY LOANS FOR STRUGGLING INSTITUTIONS
A £5m rescue fund has been set up to help save vital Newcastle institutions left on the brink of collapse by the Covid-19 crisis.
City council bosses have revealed plans to give new emergency loans to organisations struggling with the devastating financial impact of the pandemic, including those in the arts, culture, and leisure sectors.
However, the council is not inviting bids for the grants, saying it will instead give the cash directly to bodies that have an “existing financial relationship” with the local authority and whose collapse would pose a risk to the council’s own finances.
To be eligible, organisations will also have to be shown to be financially successful prior to the coronavirus outbreak but then left without sufficient help from the government to ensure they can survive the damaging effects of the lockdown.
Newcastle City Council warned last week in a paper submitted to the House of Commons that beloved institutions like the Theatre Royal, Tyne Theatre, Tyneside Cinema, and independent music venues could be forced into permanent closure without more financial help.
Council bosses, who have reported that Covid-19 has put a £64m dent in the civic centre coffers, said the £5m fund would come from “surplus cash balances” and be backed up by the authority’s reserves.
The city’s Lib Dem opposition said “clear and effective safeguards” were needed to make sure the loans are paid back to the city council and that residents would be “rightly furious” if the money was lost.
A council spokesperson said: “We have set up a £5m fund underwritten by the council’s reserves to provide loans to organisations with whom we have a financial relationship in sectors such as the arts, culture, leisure and hospitality which are essential to the long term vision of the city.
“It will be targeted at successful organisations which because of Covid-19 have developed cash flow problems and have not been able to access funds from Government sources and which if not supported by the council would be in danger of insolvency potentially impacting on the council’s financial interests.”
The council said that loans will be offered with “strict conditions” such as the council seeking security against an asset, that interest rates would be agreed on an individual basis, and that it expects the money to be repaid within 12 to 18 months in most cases.
The spokesman added: “Unfortunately, the fund is not big enough to support all businesses, but we will continue to lobby government for appropriate support for our local businesses.”
Colin Ferguson, the deputy Lib Dem opposition leader, cautiously welcomed the move but called for the council to provide a transparent trail of how the money was being spent. Coun Ferguson said: “We understand that this money cannot be used to offset revenue pressures, but in the context of the current financial pressure on the council, residents would be rightly furious if the loans are not fully repaid in a timely manner by the organisations set to benefit.
“The council needs to clearly set out how it will manage the risks and only support organisations with genuine, short-term, Covid-19related financial challenges.”
It will be targeted at successful organisations which because of Covid-19 have developed cash flow problems