KCC defends £100,000 airline gamble charge

Council chiefs have rejected claims that their decision to invest £100,000 of public money in EUJet was a gamble that backfired. Cllr Alex King (Con), Kent County Council’s cabinet member for regeneration and the man responsible, said he accepted the investment was high risk but claimed it had produced "a good return" for Kent by demonstrating that a budget airline could be viable from Manston.

KCC lost its £100,000 investment when EUJet faced financial problems. The authority subsequently agreed to put in an additional 15,000 Euros to provide "working capital" to PlaneStation, the company that owned Manston Airport but which recently went into administration. At the time, company bosses told KCC that the operation would collapse if it did not put in the additional money.

Cllr King was grilled over his decision when he appeared before KCC’s cross-party cabinet scrutiny committee on Thursday. He was challenged by opposition Labour members, who said that in view of a warning from officers that any investment would be "high risk", the decision "beggared belief". Cllr King said:

"If you look at the period over which EUJet operated, 300 jobs were created and more than 300,000 people flew the airline. That is not a bad return. Had we not made the investment, we might now be in a situation where no passengers were flying out of Manston, PlaneStation would be staggering along and there would be very little hope for the future."

He admitted that he had not formally consulted anyone else in KCC’s cabinet about the investment but denied he was under any obligation to do so. The money had come from the Kent Regeneration Fund, consisting of money raised from the sale of Kings Hill, near Maidstone. He said:

"There was no need or requirement on us to consult. I did inform colleagues and it was announced widely in the press and we got a lot of plaudits and praise for doing it."

Meanwhile, KCC’s finance director David Lewis, who also appeared before councillors, said:

"This was not a gamble but a carefully calculated risk. By definition, not all risks pay off and I am sorry that it did not work out and this particular risk did not pay off."

The sum was a tiny fraction of KCC’s overall budget of £1.3billion, he added.

kentonline 30th Sep 2005