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At the Council meting on Wednesday last week, Tower Hamlets First councillors responded to critics of the Mayor’s decision to reclaim a loan paid by Tower Hamlets Council to the Rich Mix cultural centre a decade and a half ago.
At the turn of the century the Council (then under Labour control) agreed to provide Rich Mix with several million pounds, and since then they have received significant amounts of public money from a range of sources.
An £850,000 loan owed to the Council was due to be repaid in 2006. The Council did not insist the money be returned to until 2012, the last moment possible at which it was possible to use legal action to ensure that the money be returned.
Rather than paying up or even negotiating over the debt, Rich Mix claimed that the Council owed them £1.5 million. They took their claim to court and then withdrew it – before suggesting that they would consider paying back the loan if the Council paid them the £1.5 million which they were no longer claiming in court.
The Rich Mix Centre has a large venue which houses several commercial activities. It is not clear why, particularly in these difficult times, they should not honour their agreement to repay their loan. The Council has even offered to consider any additional community benefit which the Rich Mix can demonstrate, but no evidence has been put forward.
Speaking just after the Council meeting, the then Mayor Lutfur Rahman said: “We don’t just want the Council’s money back because it’s a decade late, but because Tower Hamlets has had to absorb £30 million of government cuts this year and frontline services need every penny. I believe passionately that culture should be supported and where Rich Mix provides community benefits we will continue to recognise and support it, but that does not give organisations that work with us the right to unconditional access to the public purse.”
The then Cabinet Member for Resources, Cllr Alibor Choudhury, said: “The arts deserve public support, and it is disgraceful that austerity has seen the Arts Council and other bodies have to cut their budgets. But there is only so much public money you can throw at a project before the time comes to say that enough is enough.”
Labour Councillors have expressed surprise that the Mayor has sanctioned legal action to try to reclaim the loan because of the cost. However, without the legal action the Council would have to write off the debt because it would be out of time to enforce it. There are a number of expenses which the debt would pay off – the costs of the Price Waterhouse Report, for example – so it is not a small sum. During the debate, Labour councillors attacked Mayor Rahman’s attempts to secure repayment of the loan but did not explain why they thought the Rich Mix should have its loan effectively turned into a grant without going through due process that is applied to grant giving.
