A half-constructed hotel in Peterborough has left the local authority facing potential losses after investing £15 million in the development.
The 160-bedroom Hilton Garden Inn sits abandoned on the River Nene’s edge, with construction halted for more than 24 months.
Taxpayers have expressed their dissatisfaction as the abandoned project is now home to “hundreds of pigeons”.
The nine-floor structure has deteriorated into what locals describe as an “embarrassing eyesore and an insult to the taxpayers of Peterborough”.
The building now serves as a roost for hundreds of pigeons rather than accommodating hotel guests. Peterborough City Council provided the funding through a loan arrangement with developers in 2017.
The property development has since collapsed, leaving taxpayers potentially exposed to significant financial losses on their multi-million pound investment.
The hotel was originally scheduled to welcome its first guests in July 2019. Construction work began following the council’s loan agreement with developers two years earlier, but the project encountered severe difficulties during the coronavirus pandemic.
The developers subsequently entered administration, bringing all building work to an abrupt halt. Since then, the partially-completed structure has stood empty for over two years, exposed to the elements without proper weatherproofing.
Despite never opening its doors, the non-operational hotel has bizarrely accumulated several five-star reviews on Google. One review praised “very welcoming staff and really nice food”, though no guests have ever stayed at the property.
The council that approved the loan in 2017 was Conservative-led, whilst the current administration operates under a Labour minority. Local residents have expressed frustration at the abandoned development’s condition.
One Peterborough resident told The Telegraph: “The building is still not finished and is degrading rapidly inside as it is not watertight. The only residents are hundreds of pigeons. It’s a total disaster.”
Taxpayer fury as council blows £15million on hotel now home to ‘hundreds of pigeons’
The structure’s deterioration has drawn sharp criticism from the community, with another resident posting on social media to blast the scheme as an “embarrassing eyesore and an insult to the taxpayers of Peterborough”.
The incomplete hotel has become a symbol of failed council investment in the city. Rather than providing accommodation and economic benefits as originally intended, the riverside location now hosts only avian inhabitants whilst the building continues to decay without proper protection from weather damage.
Accountancy firm EY released an audit of the council’s finances last week, highlighting a “significant risk” that the hotel’s current value falls below the £15 million invested by the authority.
The auditors indicated that an “expected credit loss” is presently being evaluated. The council financed its loan to developers by securing funds from a government public works loan board, according to sources familiar with the arrangement.
This borrowing mechanism means taxpayers could ultimately bear the burden of any shortfall between the investment and the property’s actual worth.
The Peterborough development mirrors numerous other council-backed projects nationwide where local authorities have invested substantial sums into ventures that subsequently failed. These schemes have left multiple councils across Britain facing questions about their commercial property investments.
Peterborough’s white elephant hotel mirrors a growing trend of council-backed projects across the UK where local authorities have sunk millions into failed developments.
Benjamin Elks, of the TaxPayers’ Alliance campaign group, said: “Peterborough taxpayers will be furious to see their hard-earned cash being sunk into a half-built hotel. The city council is playing roulette with ratepayers’ money, gambling millions of pounds on a construction project that shows no sign of providing a return.
“Local authorities should focus on delivering core services and keeping council tax low, not pursuing risky property development schemes.”
Peterborough City Council, a unitary authority, is currently grappling with £500 million in debt. Its projected budget gap for the 2025 to 2026 financial year stands at £23 million.
To rein in spending, the council is cutting services including reducing opening hours at the city museum and slashing the highways maintenance budget by 15 per cent.
The city’s Conservative group leader, Wayne Fitzgerald, said the council was not wrong to fund the hotel project.
He said: “Sensible people who understand the journey, and also want to see a return on investment to the taxpayer, will recognise this would be a good thing for the city.
“Nobody spends millions of pounds without doing their research, and Hilton wouldn’t put their name to something that they felt was doomed to fail from the start.
“The auditors have rightly expressed concern as the risk is present. But that risk was not caused by the previous administration, it was caused by circumstances like Covid, the markets and rising construction costs. If things had gone to plan, that money would have been paid back already.”
City council leader, Dennis Jones, said: “The hotel is currently under the control of the administrators.
“A report is due to go to cabinet in the near future setting out the options available and proposed next steps to protect the council’s interests and the public purse.”