Councils liable for £1 if agency collapses

Leaders had been told of £3m estimate

TOURISM: Local authorities supporting Welcome to Yorkshire would only be liable for £1 each of costs should the troubled tourism agency go bust – despite council leaders who recently agreed further taxpayer funding for the organisation being told shutting the company would cost £3m, The Yorkshire Post can reveal.

LOCAL AUTHORITIES supporting Welcome to Yorkshire would only be liable for £1 each of costs should the troubled tourism agency go bust – despite council leaders who recently agreed further taxpayer funding for the organisation being told shutting the company would cost £3m, The

Yorkshire Post can reveal.

The company was today accused of using “scare tactics” to secure additional funding after the estimated £3m closedown figure was included in a report to North and West Yorkshire council leaders last month at a meeting which resulted in them granting £1m to Welcome to Yorkshire.

The privately-run company has been in recent financial difficulties as it has struggled to deal with the fallout from ex-chief executive Sir Gary Verity’s scandalhit resignation earlier this year. It would have run out of money in September without a £500,000 loan from North Yorkshire County Council that month.

At the October meeting, Kirklees Council chief executive Jacqui Gedman, who is currently providing ‘strategic support’ to WTY, told council leaders it would be “more cost-effective to release the £1m and try to size the organisation appropriately going forward than it would be to close it down”.

But WTY has now confirmed that the company’s limited liability status means local authorities which are members of the tourism agency through paying annual sponsorship fees would only be liable for a maximum of £1 each should the organisation go out of business. The matter was spotted by Liberal Democrat peer and former Sheffield Council leader Lord Scriven, who saw the agency’s Companies House filings includes a provision that should the business be wound up, members are only liable for any repayment of debts and liabilities for amounts “not exceeding £1”.

A report to council members on the Business Rates Pool board by then-interim chairman Keith Stewart, who has now been replaced by Wakefield Council leader Peter Box in the role, said a “managed closedown” of the business which would have resulted from funding not being granted would carry “major risks”. It said: “The team estimates it would cost £3.18m to close the organisation down by the end of the financial year in March.”

The report added that the true figure could be even higher once an estimate for the negative impact of North Yorkshire County Council’s pension fund, which WTY had been part of, was finalised.

Lord Scriven said today: “The liability was £1 per member – the £3.18m figure has been made up to scare councillors to dip into taxpayers’ money to bail out what ultimately is a bankrupt company. It was a scare tactic to try and keep the company going.”

A spokesperson for WTY said the £3.18m estimate “was based on a solvent wind-down of the company’s operations” and that “council leaders are aware of the legal status of Welcome to Yorkshire”.