Croydon Council has cut development partner John Laing out of receiving profits from its new £145m headquarters.

The council has been forced to borrow Government money to construct its new HQ in Fell Road, after the firm discovered the best loan rate it could find would push the new building £97.5m over budget.

Auditors Pricewaterhouse Coopers were called in to scrutinise whether John Laing’s claims were legitimate, before the council turned to the Public Works Loans Board for a £145.6m loan.

A council spokesman said the developer was now handling only the construction side of the project, with any risk associated with the loan falling squarely on the local authority.

He said: “The construction cost of the (HQ) is capped - so the risk is John Laing’s if it goes over.”

The council has called in a third party group to calculate how large John Laing’s reduction in the share of profits from other phases of the URV should be.

Council leader Mike Fisher agreed on Monday to take part in an emergency council meeting discussing the future of the Urban Regeneration Vehicle (URV), which includes the new headquarters as well as several other key sites in the centre of Croydon.

Opposition leader Tony Newman demanded the meeting be held before December 15, saying the people of Croydon “need to know what’s being done in their name”.

Developer John Laing will still have to raise finances for the rest of the URV developments, with a council spokesman confirming there would be no Government loan solution for the other projects.

Labour opposition leader Tony Newman has referred the council’s decision to borrow Government money to the European Union, on suspicion the authority has broken the rules on State Aid.

But a council spokesman said state aid rules had not been broken, since John Laing would no longer be taking a development profit.

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