A DECISION to loan £500,000 of public money to complete Bridgwater’s new Mercure Hotel has come under fire this week.

The mayor of Bridgwater, Cllr Diogo Rodrigues, was among those critical of the decision - saying ‘people are frustrated and rightly so’.

While Sedgemoor District Council (SDC) defended the decision saying the loan would generate income for the council and help generate jobs for Bridgwater, Cllr Rodrigues said this was the wrong time for the council to be acting 'as a bank'.

Cllr Rodrigues said: “At a time when Somerset County Council has proposed millions of pounds in cuts which will undoubtedly affect so many of us in Bridgwater, Sedgemoor District Council seem to have opened up the Bank of SDC to bail out a company which you would have thought would have a robust business plan in place.

“The councillors that made this decision are, in my mind, arguably out of touch with the public and should do more to hear what members of the residents have to say before such decisions are taken.

“Perhaps if we had a booming economy whereby public services were not being cut and more money taken out of our pockets through council tax for less - some might have viewed this as a sound investment at the right time."

The Bridgwater Mercury's online story regarding the loan received dozens of comments from residents querying the decision.

However Sedgemoor District Council said it was in a financial position with general reserves of £6.3m and should not be confused with financial situation of Somerset County Council.

Cllr Duncan McGinty: “Not so long ago we were in a position somewhat similar to Somerset County Council but because we made some tough decisions then we were able to get ourselves into the good position we are in now.

“With government grants ever-decreasing, councils have to come up with ways to help fund and provide services that residents value.”

The council say The Mercure Hotel is a 'flagship regeneration project 'for the viability of the town centre.

“This importance is reflected in a loan from the Local Enterprise Partnership totalling £4.5 million,” an SDC spokesman said.

“Market information suggests that, once opened, the site would be worth well in excess of any loan amount.

“The site had been in a derelict state for many years and its development is already seeing positive knock-on economic and regeneration effects and will offer employment to more than 50 people.

“There is potential for significant positive economic benefits and it will be the only four star hotel in Bridgwater.

“While the hotel is nearly complete, the scheme met a number of challenges in the construction phase, which had a knock-on effect on costs and the planned opening date.

“These included a large amount of concealed asbestos fibre, oil and paint contamination in the ground, restrictions on construction methods due to neighbour boundary issues, ancient human remains located under the building and difficulties in getting the compliant external cladding material due to increased demand because of Grenfell Tower.

“Councillors debated what would happen if the loan were not to be made and decided that as well as generating income, the Council would not want to see any more delays in the opening of the hotel.”

SDC say all loans have legal and financial ‘due diligence’ tests – this means thorough financial and legal background checks and detailed investigations prior to signing a loan agreement.

Leader of the opposition on Sedgemoor District Council, Cllr Mick Lerry said: “The Labour Group, on Sedgemoor District Council, recognise that the Bridgwater Mercure Hotel is an important economic development for Eastover and the Celebration Mile.

“However, when considering any loan either to a public organisation or a company, the Labour Group will assess information regarding the business case, social value, financial and legal advice, and any risks associated with the recovery of the loan; bearing in mind that there are other loan providers in the market.

“If these ‘tests’ are not met, then the Labour Group would not be able to support a commercial loan to a company. The Labour Group is always mindful that when dealing with financial loans you are dealing with public money, therefore scrutiny must apply”.