Leading councillors in Northumberland have defended the decision to spend £130,000 on consultants to re-examine plans to restructure tens of millions of pounds of debt held by its development company, insisting it is the 'right thing to do'.
Plans to convert £80 million of Advance Northumberland's debt into shares have been put on hold, despite being approved by full council in March 2025. At a Tuesday meeting of the Northumberland County Council cabinet, officials explained that geopolitical issues—including the war in Iran and its impact on the global financial system—had raised concerns that the move might no longer be the best option.
The original proposal involved converting the debt, owed to the council, into shares through a debt-equity swap. This would have freed Advance, which is wholly owned by the council, from large interest payments that have hindered its ability to carry out regeneration and house-building projects. The money was lent under previous administrations on an interest-only basis, meaning the principal amount would never be repaid.
However, the swap has not yet taken place, and consultants will now be hired to recommend the best way forward. Speaking at the meeting, cabinet member for finance Coun Nick Oliver said Advance's work was 'critical' to regeneration and house-building in the county and insisted that reassessing the decision was the correct move.
'In March 2025 there was a report taken to full council which was voted through about a financial restructuring of Advance, but we have decided we need to take another look because the world has changed quite dramatically in that time,' he said. 'The world and the national economic picture has changed with the war in Iran and the closure of the Straits of Hormuz. There are also inflationary pressures. This is a very different council to March 2025—more than half the members are new and there have been significant changes in the executive team.'
'We also have more clarity on the council's funding with a three-year settlement that doesn't touch the sides of our inflationary pressure, never mind increasing demand on our services. We have decided that the sensible thing is to look again at the best structure we can have. There's some very good work being done and we have to support Advance. We need to provide a structure that provides the best value for money for residents and allows Advance to grow and the freedom to operate.'
He added: 'This report asks for funds of £130,000 to go to consultants and have another review done to come forward with opinions and recommendations on the best structure to suit Advance and the council going forward.'
Speaking last month, council leader Glen Sanderson insisted bringing in expert advice was 'not a waste of money'. Opposition group leaders have received briefings on the subject, and backbench members will be briefed at a forum event in July. It is likely that any new decision on Advance's future and the debt will need to be considered by full council again.
At the cabinet meeting, Sanderson said: 'We want members to feel very involved in how we progress this. It may well come back that the arrangement is the same as last March, but it is right to look at it again because of the changes in the world. Advance has done so much in the county. Building for the future means having the commercial expertise that will look at bringing in further industry—a future for Northumberland that will continue to make it outstanding in the region.'
'The key reason we need to do this is around the level of debt that it was given when business decisions were made a number of years ago. Without blame attached at all, we need to make sure we can deal with that particular element, which is at the root of the financial query around Advance. It is nothing to do with this administration. It goes back a long way.'
Speaking at the cabinet shareholder committee immediately after cabinet, Advance CEO said the company would be able to do more if freed from debt constraints. He stated: 'Advance is a sustainable business now, it is not a drain. We have a clear, ten-year business plan—which has not always been the case. There's so much more we could do if given the opportunity. I'm looking forward to the financial position being resolved.'
