Taxpayers foot the bill as supermarket demands interest on unspent developer funds be repaid

PUBLISHED: 08:35 09 October 2014 | UPDATED: 08:35 09 October 2014

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Taxpayers had to stump up more than £8,000 in interest payments to Sainsbury’s when cash, earmarked for road improvements in Ely city centre, was returned to the supermarket giant.

In 2012, when Sainsbury’s opened a store in Lisle Lane, Ely, East Cambridgeshire District Council received more than £1.4million in developer contributions to fund projects to improve the city centre.

More than £600,000 of that money was earmarked specifically to ease the impact on the road network of the new store.

The council says it spent £88,694.72 of the money, including more than £7,000 on air quality surveys and more than £30,000 on traffic surveys.

But, when all the work was completed, the council says that the studies showed that there had been no significant impact on the road network around the city and so, legally, it was not able to spend the remaining funds – which came to £535,000.

But, in demanding the cash be handed back, Sainsbury’s also requested all interest earned on the cash be paid back – about 0.5 per cent - which came to £8,625.96.

In a letter to the council, which has come to light as a result of a Freedom of Information Act request, solicitors acting for Sainsbury’s said: “Whilst of proportion (of the S106 money) has been expended legitimately, that leaves a significant element of the contribution which will never be required since there is no prospect of a material increase in traffic attributable to the store.

“In effect, the council is in possession of a large element of the contribution which cannot now lawfully be used for any other purpose and the remaining contribution should therefore be returned.”

The solicitors asked for the cash to be returned within 28 days and warned the authority against spending any more of the money, claiming it would be “unlawful”.

Last month, Liberal Democrat councillor Gareth Wilson wrote to Sainsbury’s and called on bosses to hand some of the cash back or face a “double whammy” of bad publicity.


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