County council set to reject £15m grant

Senior councillors at Leicestershire County Council are poised to turn down £15m of Housing Infrastructure Fund (HIF) cash because the project represents ‘too great a financial risk’.

Homes England had offered the grant to help fund the £35m southern leg of the Melton Mowbray distributor road, leaving the council with a £20m bill.

The road would enable the building of a residential development, which would create the need for £35m of new school provision.

The council had said there was a ‘reasonable chance’ that the £55m would be ‘fully recoverable’ from developers over a period of up to 20 years.

It had hoped that Melton Borough Council, which makes decisions on Section 106 funding, would underwrite any shortfall if £35m could not be secured for new schools provision from developers.

But talks between Leicestershire and Melton broke down after the latter insisted on a ‘liability cap’ of £1m, which county officers believed would leave their authority ‘significantly exposed’.

A report to a Leicestershire CC meeting next week states: ‘A failure to comply with housing outputs (not the responsibility of the county council) could have seen the county council having to refund all or part of the HIF grant.

‘The quid pro quo for the receipt of HIF funding is that most of the contractual risks for the delivery of the project would be borne by the county council.’

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