Fears for £8m of North Yorkshire taxpayers’ money as Scarborough water park firm collapses

North Yorkshire Council has launched an investigation into its position over an apparently unsecured £9m loan which was given behind closed doors by Scarborough Borough Council to Benchmark Leisure, the firm behind the Alpamare water park in Scarborough.

While administrators MHA confirmed they are exploring options to resolve Benchmark’s financial position, which could include trying to find a buyer for its main asset, the water park, leading politicians in the area last night expressed dismay over the outcome of the 35-year loan deal.

North Yorkshire Council’s leader Councillor Carl Les has described the financial headache inherited from the borough council as “very disappointing”.

Scarborough and Whitby MP Sir Robert Goodwill added: “Right from the start Benchmark have failed to deliver what they said they would and sadly its come to this.”

With a capacity of 3,000 people a day the waterpark was designed to complement Scarborough’s other attractions and although it had been hoped it would attract 500,000 people a year before it opened, a record attendance of over 145,000 people was announced in 2019, turning over £2.4m.

Comprising of a large wave pool, some of the country’s longest water slides, and two outdoor pools overlooking the North Sea, all heated to 34 degrees, the water park has become a lynchpin in the Scarborough area’s tourism offer.

Tourism industry leaders said while the firm’s collapse was a serious blow for the Scarborough area there was still a spectrum of other attractions to draw in visitors.

Benchmark’s position has emerged just days after it was announced the attraction would close for winter due to high energy costs.

The administrators said the financial issues surounding Benchmark were complex and it would hold talks with the council while options over the £8m debt and that Benchmark’s primary interests are in the water park.

When asked if it was possible a buyer could be found for the water park, they added: “It’s possible that the position can be resolved, but there are quite a few things that need to happen that are not necessarily under our direct control at the minute.”

Scarborough council’s move to borrow £9m from the Public Works Board to help fund the £14m alpine-themed attraction was approved by just one vote after the public was excluded from a full meeting of the council in 2013.

The decision was made following an officer’s report which has never been published and presentations by a director of Benchmark.

Minutes from the meeting, which make no reference to the scale of the loan, state council officers provided councillors with “very detailed explanations of the full financial and legal risks involved”.

Concerns are mounting over the amount the North Yorkshire Council will be able to recoup as it is understood Scarborough council did not register a charge against Benchmark over the loan, meaning as an unsecured creditor it could find itself low in the pecking order as the firm’s assets are divided up.

With North Yorkshire Council already facing a £25m annual black hole, the council’s plans for securing key services have been based on the Benchmark loan being repaid in full.

To set the outstanding £8m of the loan in context, a one per cent increase in North Yorkshire’s council tax raises just over £4m.

It is understood if some or all of the loan is not repaid, the authority would be likely to use its dwindling reserves to plug the gap.

A council spokesman said: “We are liaising with the administrators and are considering all options available to us at this time with a view to minimising the impact on us and the Scarborough area.”

Benchmark’s directors have not responded to a request for comment.

Councillor Stuart Parsons, leader of the authority’s Independent group, said: “This loan should have been very high on the list of risks to alert councillors to when the unitary council was formed.

“The reserves are there to stabilise the council at times of acute need – we could have a really bad winter and need to buy lots of salt – and the reserves can only stretch so far.”

Green group leader Councillor Kevin Foster said: “I am very concerned by this and hope there is nothing else unearthed at other councils that we are slightly unaware of.”

Leader of the authority’s Labour group, Councillor Steve Shaw Wright, said: “Everything should have been honest and open. We now need to look at all the district and borough councils’ debts across the patch because we can’t keep dipping into almost non-existent reserves.”