The owner of the Brighton i360 said that it would not be able to make the six-monthly loan repayment due by the end of this month.
It would be the second year in a row that the seafront tourist attraction’s owner has missed the payment.
The revelation comes days after Brighton and Hove City Council leader Bella Sankey said that public money should never have been used to support the project.
She said that Brighton i360 Ltd currently owed the council £44 million including interest on the £36 million loan brokered by the council from the Public Works Loan Board.
The company has paid £250,000 towards its debt this year but the annual total should be £1.49 million, with payments due each June and December.
So far, the i360 has repaid £5.8 million but, under its original repayment schedule, had been due to stump up almost £18 million by September this year.
In a statement issued to the BBC, Julia Barfield, who chairs Brighton i360 Ltd, said that inflation, poor weather, the “cost of living crisis” and national train strikes had affected visitor numbers.
She said: “City spending and visitor numbers are still lower than before the pandemic. Nationally, visitor numbers are down across UK attractions by 24 per cent, according to the Association of Leading Visitor Attractions (ALVA).
“At Brighton i360, there is still a 16 per cent drop in visitor attendance compared with pre-pandemic times.
“Paying the loan back to the council has always been a top priority for Brighton i360 and we are sorry we are unable to make December’s instalment to the council.
“We appreciate both our community and the council’s understanding and would like to thank them for their continued support.”
She added that the company had worked on improving the business. In the past year, it has introduced the Sixes cricket experience and a roller rink, with more attractions due next year.
Labour councillor Jacob Taylor, who leads on finance, said that the council was setting aside £2 million a year to service a loan that was agreed by Greens and Conservatives in 2014.
Councillor Taylor said: “Every politician likes to blame their predecessors but, on this one, I’m afraid I can’t let the Greens get away with it.
“As of today (Wednesday 20 December), on the Green Party’s website in Brighton, they’ve still got a story from 2014 celebrating the project and saying, it’s a ‘landmark deal we’ve brokered, an exciting job-creating tourist attraction for the city that won’t draw on local budgets. The project will provide much-needed income to support local services’.
“Unfortunately, the exact opposite has been true, in which they (the i360) have not been able to pay back the loan as quickly as originally planned.”
Councillor Taylor said that the seafront around the i360 had improved and the structure was a “fantastic attraction and a great bit of engineering”.
But, even though the i360 made an operating profit, Councillor Taylor cited comments by former Labour councillor Les Hamilton from the 2014 meeting when the loan was agreed. Councillor Hamilton said that the original finance and business case did not add up.
Councillor Taylor said that the £2 million that the council was putting aside to service the loan was adding to the pressures on the council’s finances.
He said that the local government settlement announced on Monday (18 December) meant that the budget gap had grown from £31 million to £33 million. Money had been shaved from unitary councils like Brighton and Hove in favour of districts and boroughs.
He said: “The i360 loan not being repaid only adds to that (pressure) so residents will be rightly angry and annoyed with the Green council that put that through and the Conservative councillors that voted for it.
“We’re left to deal with it and are left to set viable budgets which as a result are more difficult.”
Councillor Taylor said that, despite residents’ calls, if the council tried to sell or scrap the i360, the loss to council taxpayers would be greater because the council would still be liable for the loan.
Council leader Bella Sankey said: “Our number one priority with the i360 is protecting the public purse and ensuring the council gets back all or as much of its money as possible.
“We continue to explore all options and have been encouraging the i360 to diversify their business model and widen their appeal to both residents and visitors.
“We are aware that they have taken some immediate measures and are now looking at longer-term ways to improve their business.
“We have stressed that the new longer-term business plan they are preparing must be realistic and deliverable. We will consider their plan before reviewing our next steps.
“There is no new loan agreement in place with the i360. Previous loan agreements weren’t implemented – firstly because of the effects of covid on the visitor economy and then because it was based on a business plan that the i360 was unable to deliver.
“This has reinforced the importance of getting to the point where we have a sustainable and deliverable business plan first and then basing the loan restructure on that, rather than the other way round.”
Our Labour Council appear to have as fierce a loyalty to this albatross as the Green and Blue parties they blame for voting it through and would rather close schools and go bankrupt than pull the plug on it. What a stonking episode of ‘If you don’t pay, we’ll take it away’ this would make, as Mr Nigel Furness suggested in his question to Full Council last week.
Levity aside, BHCC compulsory purchase of the i360 land from West Pier Trust for the £1 it was sold to WPT for in 1978 when WPT was founded and promised to save West Pier and then epically failed would be a start.
…and you were quite rapidly and articulately reminded why Mr Furness’ suggestion was an extremely fiscally inept standpoint to hold. Allow me to remind you, that “pulling the plug” would not make the debt disappear, it would mean that now you’d have a debt with no functional building.
It’s astonishing that none of the council members responsible for this farce have faced any consequences. I think it’s criminal.
Well there’s a surprise…
There’s a shock!
Councillor Hamilton is a former maths teacher – why didn’t BHCC listen to him when he said the figures didn’t add up? Needs to be an investigation
TBF to Labour what else can they do? Say no more loans and then we will all be liable for the £40 million in debt. The rail strikes and poor weather have made for a poor summer season that can’t be disputed. I guess the worry will be if we have a good summer season and the loan repayment is not made. Do we then take the hit?
The strikes and weather are an excuse. The weather should have been factored in, it’s not exactly rocket science to realise this wouldn’t be a weekly attraction. It’s a one off visit at best. An absolute disgrace of a project that sums up a lot that’s wrong with this country.
By Julia Barfield’s own figures she has quoted, if you reverse the 16% downturn in visitors to the £250,000 that was paid only increases it to £290,000. I quite agree with you Michael that this was a poor excuse offered. Everything else, you’re on your own about.
Right from the start there was inadequate equity investment in the whole scheme. Trying to fund such a scheme primarily on borrowings was madness and should never have been permitted. If it shows anything it is the complete naivety of the councillors who voted it through. Surprising, in the case of the Tories with their claims to financial competence, but not so with the Greens, who illustrated just how green they were in financial matters. We, in the Liberal Democrats, call for more equity funding not further borrowings to bring this project onto a more secure financial footing. The i360 is profitable, it is just not profitable enough to meet its borrowings commitments.
Money in….money out …Revenue less all cost – including borrowing – means it’s an insolvent business: no amount of creative accountancy will solve the fundamental issue. The only way a normal business could resolve this is bankruptcy: the problem is a Public Loan lent to a Private business means the Council can never get out of it: utter bonkers!
Why didn’t the council get personal guarantees for the loan from the private owner of this pile of rubbish?
Aahhh because the owner isn’t that stupid and they knew it was so risky. Plus the council are absolute mugs.
Clueless council gambling on white elephant vanity projects.
“A complete waste of time and money”. I pointed this out 8 years ago, its a folly at best. Why would you want to go higher up to look at Brighton and its surroundings ? Its hardly a modern wonder of the world! Some of the original claims of what you could see were also false and a quick mathematical check would have revealed this before work on the “eye sore” even started. If you want a view of Sussex go up on the downs its free and far prettier and on a clear day you can see the isle of white!
Massive DEBTS and LOSSES to the Council from this novelty scheme that was approved with £40.2 Million of Public Money by the Greens and the Tory Councillors. Financial incompetence, heritage lost and a bigger “carbon footprint” as a result of that decision by those Green/Tory Councillors!
“We appreciate both our community and the council’s understanding and would like to thank them for their continued support.”
NO WE DONT UNDERSTAND and NO WE DO NOT SUPPORT YOU
All the community has to do is pay this outrageous debt that we never wanted or asked for and everyone outside the in the real world was against but never had a say.
I had similar thoughts reading that line. It comes across as rather flippant.
What happened to the Council’s ‘step in rights’ which were written into the proposal before the attraction was built? I challenged the proposal on financial viability grounds and had a private face to face meeting with Council members, during which I was assured the Council would run the attraction itself should it fail to achieve certain visitor numbers (and therefore income).
I was told a situation would not be allowed to occur where the repayments to the PWLB could not be made: ‘it had never happened before and would not happen’.
This was before the pandemic, right? Well…the pandemic happened. You might be inadvertently ignoring that particular piece of information there, Gail.
The i360 was in debt long before the pandemic.
Has anyone been on the i360 website? It’s clearly aimed at affluent and/or corporate clients with lots of money to spend. What about the rest of us who are struggling with high inflation and the cost of living crisis? If they want to make bigger loan repayments and better profits then surely it’s obvious. They need cut-price tickets for regular families/people that are affordable i.e no more than £10 for an adult to go on the i360. I think their marketing strategy is totally wrong.
By the end of this year, i360 Ltd are likely to owe the Council a CUMULATIVE amount of close to £15MILLION, according to Freedom Of information responses from the Council and Council documents.
Councillors GET A GRIP of your responsibilities.
Us ratepayers voted for you to actually WORK for our benefit.
Get off your butt and take POSITIVE ACTION to recover our money.
Some of it could usefully fill a few potholes in the roads.
Oh John, it’s not that simple. I get why you’re angry. However, it’s never going to be a case of “Oh, John Coleman on the internet said we need to get off our butts and do something”. It’s a rather silly comment to make.
Brighton and Hove City Council due to incompetence or doubtful business practices ended up being a party to the planning application to build the big lift to nowhere.
As a consequence the metal sections were built and accumulating more costs I storage. These damages were allegedly put in a pre claim letter of c £10m. This leveraged BHCC to provide the loan facility as it was £10m and no lift or approve the loan.
Obviously the loan was approached…. one almighty stack of cans kicked down the road
We all new the i360 was a waste of space, money could of been better spent on better things , like doing up the old pier ,supporting our schools and keeping them open for the next generation of children.
I personally don’t think bhcc don’t no what they are doing!!!! , I struggle to pay my council tax but pay it !! Only to see them wasting on this debt which we will end up paying for , so come on labour council get of your back sides save St Bartholomews school and do some good for a change , unbelievable how you treat our young children , won’t be voting Labour party again!!!!!
Oh…I fear you would need a lot of work to get to a level where we could have a reasonable discussion on this, between the mastery of grammar, incorrect word usage, and viewpoints that betray an utter lack of understanding of the situation, and your unrelated tangent – I feel that’s a behemoth task, and not one we will tackle today.
I’m afraid I’m having to question your post. Most of us knew this project was doomed to failure long before it went up. (PUN INTENDED). The money in fact was a loan and can not be used for the general pot, but having said that, the revenue would have covered the loan if the figures had been realistic and not the obvious made up ones they presented.
Correct, BHCC don’t have a clue, for the simple reason they are not experts, they are normal people with agendas. They needed experts with Business heads and the means to question the module at every stage, but sadly, the failed, even when question marks were presented. The biggest clue for me, was when the ‘Private’ Business investor pulled out.
We are in difficult times and struggling to some point, and yes, BHCC have wasted a lot but there’s nothing we can do about that in the short term.
As for your comments on the school, I can see from both sides, if they haven’t got the numbers then something has to give. I’m not defending the council but unless someone can come up with a better solution we just have to accept it for what it is.
As for voting, personally, I don’t want the Greens, that leaves Labour or Conservative. Out the two, who would you choose.
The business plan, so it seems was touted worldwide and got very short shrift because the numbers just never added up.
Their London eye project was successful because it’s continuous. Whereas this relies on “flights” per hour. I suspect that a little “Creative accounting” was gift wrapped and presented to the Council, who simply failed to act with due diligence. Whereas all number of potential investors saw it for what it was. Flawed. Whether that was “unlawful” is not for me to judge. Fact is we’re stuck with something that is highly unlikely to ever pay its way. The Councillors at the time had a duty of care to the City, community and rate payers. They ignored that inexplicably or the sake of a vanity project. Lest we forget.