Manchester Council is set to lend £11m to the Chinese development giant it has partnered with in the north of the city to buy up land for thousands of new homes.

The loan would be handed to Far East Consortium (FEC), the firm it has joined forces with to overhaul a vast swathe of land stretching from the city centre to Collyhurst .

Some councillors have expressed concerns, however, with one pointing out the vision is for 'a town the size of Lancaster' to be built onto the side of the city centre, meaning the town hall needs to be controlling the project and not the developer.

They suggest the town hall should either buy the land itself, or tell FEC to do so as part of the partnership, pointing out it had promised hundreds of millions of pounds as part of the venture.

However council chiefs, including leader Sir Richard Leese , say the loan will be at ‘minimal risk’ to the council and represents the best way to ensure development gets going, with the town hall still in the driving seat and protected financially.

The loan from Manchester Council to FEC would come from a £25m town hall pot already earmarked for the Northern Gateway project, which is expected to span 20 years and see more than 15,000 new homes built.

It would pay for the purchase of three key sites, according to confidential details obtained by the M.E.N, one of which is currently owned by Network Rail .

How the council envisages the Irk Valley under the regeneration plans

That huge plot stretches from Red Bank all the way down the side of the River Irk to the Victorian footbridge that connects Collyhurst Road to Cheetham Hill .

Under current plans, it is earmarked for thousands of new flats.

The other two sites are the former ‘Angelgate’ development on Dantzic Street - which failed in 2017 - and a third, triangular plot further down the same road at its corner with Dalton Street, currently a tip.

At the latest meeting of the council’s resources scrutiny committee, Coun Ben Clay queried why a developer the size of FEC required a town hall loan.

“As we’ve got this partnership with people that have obviously been selected through an extensive process... and media reports would tell us they are bringing a lot of money, and £200m is available to invest, I’m just wondering why we’re lending money at this stage to increase the land holdings or to assemble land?” he asked.

A pile of tyres near St Catherine's park
Land in the Irk valley that would be bought from Network Rail

In response, council leader Sir Richard Leese said he had initially asked the same question himself.

But, he said, the issue was not whether the council was to invest in the project, but how.

“It is that question: should we buy land - bearing in mind it’s land that has to be assembled all together, so if we bought the land it would have to be put together with FEC plots to make it viable for development anyway - or should we fund them to buy the land,” he said.

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“Having worked through the detail of it, I came to the conclusion that in terms of taking development forward there was no material difference between the two options; in terms of protecting the council from risk, that the loan option was the better option than the 'buying of land' option.”

The land down the Irk valley will be a ‘very difficult area to develop’, he said, due to its industrial past.

In the near distance tower the cranes around the city centre
The Network Rail land seen from the Collyhurst St bridge, with the city centre in the background

But the loan was the option 'that first of all supported development, but protected the financial interests of the city council best, because this is basically of minimal risk to the council', he added.

The loan to FEC would be provided at a rate of just under 3pc, according to leaked figures, repayable over a period of up to seven years.

Manchester council would have first charge on the land, which senior figures say would further minimise the risk to the town hall should anything go wrong.

However Coun Sam Wheeler said the decision was about more than just money.

“It’s not just about the financial risk, is it, because what we’re effectively doing is building a town the size of Lancaster on the edge of the centre of Manchester,” he said.

“Therefore there are questions of ownership and control about this. This isn’t purely a bloodless financial decision, this is making decisions about developing a whole part of Manchester over the next 20 years that will hopefully be there in 150.

Image showing how the council's new Northern Gateway vision between the city centre and Collyhurst could look

“What steps have been taken to address the lack of control we are going to have over this land, as it’s going to be in the hands of FEC?”

The council’s part of the partnership with FEC was meant to be about compulsory purchase powers, land, strategic oversight and links to government, he added, while FEC ‘were meant to bring the money’.

“And now we are giving them the money. So why do we need them?”

Sir Richard said a commercial loan did not amount to ‘giving money’, adding the FEC were also ‘committed to investing a somewhat greater sum within a five year period’.

“The major control we have is through the business plan; so any development that takes place has to happen with our agreement,” he added.

That business plan is due to be signed off by councillors themselves in due course, added strategic regeneration director Eddy Smith.

The loan proposal will go before the town hall executive next week.