Issue - meetings

To receive a report from the Deputy Chief Executive (S151) Officer on the Crediton GP Surgery additional Loan.

The Cabinet had before it a report * from the Deputy Chief Executive (S151) to consider an additional long-term loan to the Redlands Primary Care in Crediton. 

RESOLVED that:

1. Delegated authority be granted to the Deputy Chief Executive (S151) to top-up c£70k of the original loan taking the outstanding balance back to the original £2.175m.
2. An additional loan to the GP Practice of £150k be APPROVED.
3. Both loans are repaid by June 2048 on an annuity basis at a commercially fixed interest rate, subject to the completion of legal due diligence and documentation be APPROVED.

Note: *Report previously circulated

The Cabinet had before it a report * from the Deputy Chief Executive (S151) considering an additional long-term loan to the Redlands Primary Care in Crediton. 

The Cabinet Member for Parish and Community Engagement outlined the contents of the report with particular reference to the following:

• The report set out plans to make an additional loan to the Redlands General Practice (GP) in Crediton.  This was split into two parts, one relending the amount the surgery had repaid to date out of the original loan, c£70k. The second element was an increase to the overall loan balance of £150k, taking the total to £2.325m.
• The original loan of £2.175m was lent for the development of a new GP surgery in partnership with the practice and the National Health Service (NHS) back in 2021. An additional loan, again topping back up the balance repaid, was lent in June 2024 to support the build of a new pharmacy at the site.  The latest loan was to help the surgery as the costs of the pharmacy were higher than expected.
• These were commercial loans attracting an interest rate higher than the Council could attract with normal temporary investments. The Council had security of first call against the pharmacy but was ultimately backed by NHS funding. The terms and conditions would be very similar to those applied to the first loan, with external legal support drafting the loan agreement.
• The support given to the local community through both the surgery and pharmacy was considerable, therefore the Council believed it was appropriate to help in this situation.  

The Cabinet Member for Governance, Finance and Risk provided Members with information in regard to the background, noting involvement in the original loan and participation in the Patient Participation Group. The merge of the two Crediton surgeries had led to senior partners retiring, leaving the remaining partners with legacy debt. The practice had sought to consolidate this debt and move to a modern model where new GPs could join without having to buy into the partnership financially. This approach aimed to stabilise finances, attract more GPs, and support the co?located pharmacy, enabling the practice to operate as a single, strengthened service for Crediton.

Discussion took place with regards to:

• Was the original loan fully supported by the NHS, which protected the Council interest at the time and was this the case for the additional loan. It was confirmed that it was.
• It was highlighted that the report was not presented by the Cabinet Member for Finance, Governance and Risk as the report was clear that it was a Treasury Management matter.
• Why were the interest rates being withheld from Members under the banner of commercial sensitivity. It was explained that the matter had been commercially sensitive as the loan had been made to an external commercial body rather than a bank or similar institution and this had justified the need for confidentiality.
• What was the interest earned to date on the existing loan arrangement?   and had that  ...  view the full minutes text for item 96