Town Deal Interest Black Hole
PAUL MCLAUGHLIN
Hastings Borough Council has admitted it does not know how much interest has been earned on £10 million of unspent Town Deal funding sitting in its bank account. This is amid Labour claims that the interest accrued from the money has helped the council to boost reserves rather than being targeted on regeneration projects for which it was originally intended.
Cllr Darren McKenzie, Finance, IT, Risk and Assets Portfolio Holder
The Town Deal Fund was established by the Conservative Government in 2021 as part of its levelling up initiative to drive long-term economic growth and regeneration in 101 ‘struggling’ towns across England.
Hastings was allocated £24.3 million to support local regeneration, skills, and town centre improvements. Among the projects that benefitted from the funding was the delivery of 12 affordable, sustainable and energy-efficient homes within the Observer Building, support for the refurbishment of Eagle House, and schemes to improve pedestrian flow, green spaces, and town centre connectivity.
Local Labour MP Helena Dollimore has been raising her concerns about the lack of transparency in the funding process and has called on the council to commit to publishing a full breakdown of Town Deal receipts, spend, balances and interest earned to date.
At a meeting of the full council on 23 September, Cllr Billie Barnes (Lab, Silverhill) highlighted the current lack of transparency and claimed that some £10 million of the Town Deal funding has been left unspent. She believes the money is held in the council’s general account, with the accrued interest being used to fund general council spending rather than any specific regeneration projects as intended.
Cllr Darren McKenzie (Green, Maze Hill), the Finance, IT, Risk and Assets Portfolio Holder, defended the council’s approach, pointing to its Treasury Management Strategy as the governing policy for how grant monies are invested. He said the “expectation of that policy is to make sure that we are adequately investing to ensure an adequate return within the parameters of how we can actually spend that money,” adding that the money “is being managed consistently with that.” However, he conceded that he didn’t know how much interest had been raised on unspent Town Deal funding over that period of time.
The Town Deal Board met two days after the council meeting. The council’s Chief Finance Officer reported that unlike Pride in Place funding, which the Labour government introduced in 2025, Town Deal funds did not require ring-fencing. He acknowledged that there were concerns with regards the interest accrued on the unspent funds and added that he has now opened a separate bank account for Town Deal funds in the interests of transparency, though this will not apply retrospectively.
Hastings Borough Council was asked to clarify how much interest has been generated on the unspent Town Deal funding but had not responded at the time of publication.
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