EXETER City Council has been urged not to “crash” the city’s Science Park project as it tries to recover a £1 million loan.

The authority has decided to convert the loan into shares in the company running the high-tech park near Exeter Airport after hearing there is no prospect of the money being repaid when it becomes due next January.

The city council advanced the initial loan in January 2015, and it is due to be repaid – plus interest – after 10 years. But a report to an extraordinary meeting of the council said: “There is no security for the loan. The council is an unsecured creditor. Exeter Science Park Ltd is unable to repay the loan when it falls due.”

The council had the option to take enforcement action, but was warned that this was likely to undermine the company and deter potential investors. Converting the loan into equity would give the city extra security for its money.

Exeter Science Park is just off the M5 and the A30 east of the city. It sits within the East Devon District Council area, and is owned by four shareholders, Devon County Council, Exeter City Council, East Devon District Council and Exeter University.

It was set up to cater for businesses working in science, technology, engineering, maths and medicine. It currently hosts 45 companies, creating 750 jobs, across six high-specification buildings.

But councillors heard that occupancy is currently 10 per cent below break-even.

Council leader Phil Bialyk (Lab, Exwick) told the meeting it was important to reaffirm the city’s support for the project as a driver to deliver high-quality jobs.

“I don’t think crashing the Science Park is the answer to getting our money back at this stage,” he said. And he said he accepted some criticisms from opposition councillors that the authority should not have been in the current position.

“Perhaps we have not had our eye on this particular ball,” he said. “We need to put that right going forward, and I think we will.”

But Cllr Tammy Palmer (Lib Dem, Duryard and St James) said the council risked making “yet another poor financial decision”.

She went on: “We took a large chunk of public money and invested it without asking any of the right questions.

“We need to reassure people that we’re not just wasting money on vanity projects.”

And Conservative group leader Anne Jobson (St Loyes) said converting the loan into shares was the wrong approach.

“Surely our duty is to recover those funds?” she said. “We can’t afford to be generous with council taxpayers’ money. This is all too speculative, and there is no evidence that there is any further investment in the pipeline for the Exeter Science Park.

“Council taxpayers can’t rely on speculation.”

Progressive group co-leader Diana Moore (Green, St Davids) put forward amendments calling for greater scrutiny and accountability. She said the council had to learn lessons from previous ventures, including the demise of its affordable housing company Exeter City Living.

The amendments were defeated, but she said it was important that Exeter Science Park’s fortunes were turned around.

“I want to see real action and real change in the way this company is operating,” she said.

“The time to act is now.”

By Guy Henderson