A £55m loan to Manchester City’s Abu Dhabi owner will be investigated as part of a review into a fund for housing projects while Andy Burnham was mayor.
The prime minister has faced weeks of scrutiny over his links to Manchester City’s super-rich owners after the club was found guilty of boosting its income by £900m in a nine-year breach of financial rules.
Burnham, the former Greater Manchester mayor, was accused of siding with the Abu Dhabi owners after the “unprecedented” rule breach, when he said they had been “such a huge partner in the building of modern Manchester” and that he would be “really concerned” to lose them from the sport.
He could now face more uncomfortable questions after councillors in Greater Manchester said they planned to investigate loans made to property companies while he was mayor.
In 2017, three companies ultimately controlled by the Manchester City owner, Sheikh Mansour bin Zayed al-Nahyan, the vice-president and deputy prime minister of the United Arab Emirates, were loaned £55m as part of a fund operated by Burnham’s Greater Manchester combined authority (GMCA).
The loans were to help finance a major housing development called Manchester Life, which promised to create 6,000 homes in an “unprecedented” opportunity for the city. GMCA said the loans had been repaid in full but has not disclosed the interest rate or why Sheikh Mansour, as a scion of one of the world’s wealthiest families, would have been eligible.
It emerged last week that Burnham had met City’s owners while enjoying hospitality from the club at its Etihad Stadium weeks before the loans were approved. That meeting later disappeared from public records before it came to light last week, prompting the prime minister to ask GMCA to carry out a “manual trawl” of his meetings to ensure “full transparency”.
John Leech, a Liberal Democrat councillor in Manchester, said the fund – which has handed out £1bn to 50 separate developers since 2015 – would be investigated by GMCA’s overview and scrutiny committee, which he chairs.
Leech told the BBC the approval process for loans had been criticised as “very opaque in the past and that it’s not necessarily been clearly understood why X was successful and Y wasn’t”.
after newsletter promotion
He said it was “not unreasonable” to ask why seemingly successful businesses needed to borrow public money through this loan scheme. “In the case of Abu Dhabi, you would imagine that they wouldn’t have any problem accessing funds from elsewhere as well,” he said.
“And so the process clearly does seem to be out of kilter with what the original stated aims were back in 2015.”
He added: “We just want to be clear that there is a transparent rather than an opaque process”.
Downing Street declined to comment. A GMCA spokesperson said it was supporting Leech’s overview and scrutiny committee with its inquiries. They said the fund had built 11,000 new homes and was contributing “billions of pounds worth of development at no cost to the taxpayer”.
GMCA added: “Decisions to grant loans from the fund are taken publicly. Not a single viable scheme was ever turned down and funds were lent to around 50 different developers.
“The fund is open to all developers, with lending criteria based on parameters set by the government and developed with external financial experts to reflect due diligence standards in the private sector.”
