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Haringey owns up to pounds 50m debt

Haringey council in north London has admitted liability for the biggest debt of any local authority in the country - losses of almost pounds 50m from running and redeveloping Alexandra Palace.

The policy and resources committee of the Labour-controlled borough last night agreed the local authority will have to make future provision for about pounds 50m. Their recommendation is expected to be ratified by the council next Thursday.

The U-turn from Haringey, which earlier argued it was not liable for the full debt, follows a damning letter earlier this month from the Treasury Solicitor, responsible for apportioning the deficit. The letter, leaked to the Independent, criticised the council for failing to provide evidence to prove the expenditure on the palace was properly incurred.

The chief executive, Gurbux Singh, was told the only money that can be guaranteed to be recovered is pounds 4.7m plus interest, which Haringey insists will amount to around pounds 8m by the end of the year.

The problems began in 1980 when the council became trustee of the site and through a charitable trust took over the running of the palace and the 200-acre park from the Greater London Council.

The palace, birthplace of BBC Television, was devastated by fire in the same year. The rebuilding and running costs have spiralled to pounds 54.7m.

Haringey has tried to offload the revenue debt of about pounds 24m from the running costs onto the charitable trust.

However at the meeting last night, Haringey's director of corporate services, John Pirrie, said the council has provided pounds 4.5m in its budget for 1996- 97 "against non-recovery of the major part of the deficit" in respect of Alexandra Palace and park. He explained that the decision to accept liability would "impact adversely on the level of services provided" within the borough, adding that negotiations have begun with the District Auditor and the Department of the Environment to spread the debt repayments to the trust over 20 years.

Haringey will now choose a developer for the 123-year-old site at Muswell Hill in an attempt to recover losses and make it commercially viable. The highest of the three shortlisted bids is worth pounds 11.8m. Only when the trust begins to make money will Haringey be entitled to reclaim some of its expenditure. Outside the meeting, council leader Toby Harris told the Independent: "It is a success for the council - within two weeks we will have chosen a developer and resolved the outstanding debt problem."