MID Devon District Council has approved a loan of more than £200,000 to Crediton’s doctor’s surgery, Redlands Primary Care, even though the move drew some scrutiny.

Redlands originally took out a £2.17 million loan from Mid Devon District Council in 2021 for the construction of the new integrated health hub in Crediton.

Since then, the surgery in 2024 borrowed back the £124,000 it had repaid up to that point, but now has come back again.

The latest request asks to borrow the £70,000 it has most recently repaid, plus a top-up of £150,000 to help it with additional costs linked to its pharmacy building.

While councils do loan money to other organisations, this predominantly tends to be other councils. The rationale behind such loans is that interest can be earned from the organisation borrowing the money, which bolsters the lending council’s coffers.

There was some initial confusion – subsequently cleared up – about the potential use of some of the funds, as well as queries about why the interest rates on the loans were not being publicly disclosed.

The report to cabinet stated the £70,000 would enable “the repayment of personal loans from retiring partners of the GP practice”.

Some attendees, including the council’s former cabinet member for finance, Councillor James Buczkowski (Liberal Democrat, Cullompton St Andrews) queried whether some of the cash being requested was actually going to be routed to former doctors.

“Most concerning is that it seems some of the additional lending will allow the repayment of personal loans from retiring GP partners,” said Cllr Buczkowski, who now oversees the finances at Devon County Council.

“How is funding the retirement arrangements of individual practitioners meeting the test of being in the best interests of residents across the district, and how can cabinet justify the use of council capital, and what precedent does it set?”

But Councillor John Downes (Liberal Democrat, Crediton Boniface) stressed the money would not be going to individual GPs.

“It is not directly paying for someone’s retirement,” he said, “but is incurred debt that the surgery wants to consolidate in one place.”

Cllr Downes outlined that when two surgeries merged – Newcombes and Chiddenbrook – to create the hub, some GP partners retired, and that debt taken out in relation to those individuals by their employer now needed to be consolidated into one place. The money was therefore not going directly to individuals to pay off debt they had personally taken out and it was “inflammatory to say it was paying for people’s retirement”.

But Cllr Buczkowksi raised other issues.

“Why is the interest rate being withheld from members, because we are not a commercial loan provider, and the interest rates and returns [of the council’s investments] are routinely disclosed to allow proper scrutiny for members.

“What’s different, and why are members being asked to approve a long-term lending decision without sight of headline rate?”

The council’s head of finance, Paul Deal, said the details were commercially sensitive because it was a loan to an “outside body”, but as reassurance, stressed the surgery was “fully up-to-date with its payments and had paid instalments on time since 2021”.

Mr Deal added that the loan was fully backed by the NHS, meaning it was deemed a safe investment.

Councillor Natasha Bradshaw (Liberal Democrat, Upper Culm) asked whether other councils lent money to GP surgeries.

“And in Mid Devon, is this the only GP we support, and have we ever had requests from others, or might we?

“I know GP surgeries are challenged financially, as are we, but I’m questioning why we’re doing this, and wondering if there are other models where GP surgeries have been given loans by the private sector.”

Mr Deal said he did not know if other councils had done something similar, adding that such approaches were “not uncommon”.

“I can’t give the reasons why a surgery can’t or is unable to get money out of NHS England, but our loans to them are fully backed,” he said.

“We would consider any other surgery; no others have come forward, but we would consider any request on its own merits.”

He added the original loan enabled the construction of a brand new surgery, which had obvious benefits for its patients.

Cllr Buczkowski added: “I’m still confused about whether this is genuine treasury management or commercial lending to prop up the NHS, and it’s sounding more like the latter which does not fit its billing as treasury management.”

The cabinet voted to approve the top-up loan and the additional cash.

Bradley Gerrard

LDRS

• Redlands said in a statement about taking an additional loan from Mid Devon District Council: “When we moved from two sites into our new home at Redlands in October 2021, it quickly became clear that our patients were keen to have a pharmacy located on site.

“At the time, the pharmacy next to the old Chiddenbrook practice was also looking to relocate, which created an exciting opportunity to bring pharmacy services directly to Redlands.

“We purchased the unit where the Redlands Pharmacy is now located and carried out significant groundwork to make it possible, including the addition of an overflow car park. The total cost of the project was £350,000.

“The pharmacy is run by Matrix and operates under a 20-year lease, paying rent to support the site.

“Because of national funding restrictions, we were unable to take out the necessary loan straight away.

“Over the past three years, we have worked closely with NHS England to resolve this, and while these processes can take time in large organisations, we are pleased to say that NHSE has finally amended the legal restrictions and the loan from MDDC has now been approved.

“During this period, the Redlands partners personally covered the short-term costs to keep everything moving forward. We are delighted that the loan is now in place and would like to reassure our patients that Redlands is in a strong and stable financial position.

“This investment supports the services already available on site and helps us plan for further expansion in the future. We feel very fortunate to be based at Redlands and look forward to making even more use of this fantastic site for the benefit of our community.”