Should the Council continue to own the Liverpool Arena and Conference Centre?

The company behind the Arena now owes the Council £7 million. This may be good value for money or it may just be money wasted. We just do not know and as custodians of the City’s money I think we should.

A recent report on the finances of the Arena shows just how poor the Council has been in controlling the huge commercial assets that we have created.

Basically, the Council is carrying on its accounts some £7 million of debt which has been accrued by the Arena Company. This may never need to be used if the Company trades its way out of the problem, but we have to allow for it in our reserves and balances on a ‘just in case’ basis. This of course makes some limitation on the way that we use those reserves and balances at a time when we are trying to cut our expenditure or increase our income by £73 million.

Originally suggestions were made that the deficits were largely caused by the problems caused to all venues by Covid. That would have been understandable as all hospitality venues were affected, but it would appear that all grants, furlough schemes and similar measures were claimed for correctly.

In fact, the debts relate largely to actions taken around property developments going back to 2015 and 2016 which have only just been revealed. We have to ask what our directors on the ACC were doing at the time to control potential losses and report problems back to the Council so that they could be examined and incorporated in the council’s base accounts. We also have to ask why they did not appear as a potential liability on the Council’s annual accounts going back to that time.

The arena and conference centre are a very important asset for the city. An event in the arena can bring 17,500 people to the city many of whom will spend money in shops, restaurants and hotels as well as paying for their tickets,. A big conference like the Labour and Liberal Democrat ones brings in not only large amounts of cash but large numbers of  media crews who can publicise our City as well as the conference itself.

It was absolutely right that the City Council, under Liberal Democrat control should have built the venue in the first place. We all know that the area had been semi-derelict for decades and needed a boost at a time when the Council had successfully bid for the European Capital of Culture. Delivering that facility on time inside a short time scale was a master stroke which sealed into our tourism and hospitality industry a permanent Capital of Culture dividend.

Back in 2002 with no track record there was no private sector partner available. Now with 15 years of financial statements available that may have changed, and the asset can be released.

But has the time now come when we should consider the sale of the asset to the private sector who have the skills and commercial knowledge to be able to control a vast undertaking of this size. We have excellent staff within the Council, but they are not entrepreneurs. Their skills may be different to the skills needed for a market led company such as the Arena. This may also have the effect of releasing capital back into the council that we can use for other capital projects internally or externally.

We should also question the ability, skills, and knowledge of the directors that we have placed on the Board to oversee a complex commercial operation. There is also a wider question of whether all the Directors of the Company have the commercial skills and knowledge to adequately oversee this asset which is so important to the tourism and visitor economy of the City.

I know several of the Directors and I do not doubt that they are decent people. However, when creating a Board of a Company, the Cabinet of a Council or the Board of Trustees of a charity we need to carefully consider how we achieve the right mix of people with the right skills to take that particular organisation forward.

There is a meeting of the Companies Governance Committee later in February and I have asked its chair, Cllr Kris Brown to put the future ownership of the Arena onto the agenda. I have no fixed view on whether or not a sale is desirable.

Do we see a long-term dividend stream coming back to the Council over the years? What profit could be taken now to fund other activities? Is now a good time to sell tourism based assets at a time when the market is still depressed post-Covid and even more depressed because of the appalling financial circumstances that the Country finds itself post Brexit and post-Truss!?

What we do know is that we need absolute clarity as to how the Arena is run with regular reports back to the Council as its only shareholder about potentials gains and potential liabilities.

The ACC is a huge and important generator of tourism and visitors for the city. With £7 million of losses being propped up by the Council we need to examine all aspects of its work to see that it flourishes and delivers the objectives that the Council has set it.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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