A £12m centre designed to train the next generation of aircraft engineers is losing a council-owned company up to £500,000 every year, it has been revealed.
The International Aviation Academy Norwich opened in a former 1930s hangar, close to Norwich Airport - amid much optimism - in 2017.
Owned by Norse Group - a company which belongs to Norfolk County Council - City College Norwich and KLM provide aviation industry training in the centre.
But senior Norse officials have revealed the centre is losing the company between £300,000 to £500,000 every year.
And Norse has written down the centre's value - an accountancy term which reflects an asset's declining worth - by £7.5m.
'A great idea... 10 to 15 years ago'
The situation was discussed at a meeting of Norfolk County Council's cross-party scrutiny committee, where councillors quizzed Dr Andy Wood, Norse Group's chairman.
He said: "The Aviation Academy has been incurring losses for many years.
"It was a great idea 10 to 15 years ago, but never really fulfilled its promise and that is costing Norse between £300,000 to £500,000 a year. It has had to write that down by £7.5m."
The centre features an ‘emulation zone’, containing a redundant Boeing 737 for practical training, and a ‘study zone’ for more traditional classroom and research study.
Opened by Carol Vorderman, the centre has been visited during election campaigns by two former Conservative prime ministers - Theresa May and Boris Johnson.
Dr Wood said: "I was there on that opening day and it was filled with optimism.
"This was a joint venture between KLM, which was going to put its maintenance at Norwich Airport and City College, which was going to put a number of students through there - a fantastic idea.
"What has transpired is that KLM are not doing their maintenance to any large degree at Norwich Airport and the City College had had real difficulties recruiting into that course.
"That's not to say it was a bad idea at the time, but it's to say, over time, it has not materialised in the way that we all envisaged it.
"We are writing down the value of the asset. That doesn't mean the asset doesn't still exist and cannot be used for meaningful purposes.
"It's not as if we are demolishing it. We will still have a shiny asset sitting there."
What is the impact of Norse's finances on Norfolk County Council?
Norse has loans of £25m, including £14m from the county council.
Dr Wood told the scrutiny meeting the company was looking to "trade its way" to a position where it would pay back those debts.
The company's own accounts state a loss of £13.7m in 2021/22, £5.8m in 2022/23 and £7.3m in 2023/24.
But Norse said it made £27m in that period in earnings before interest, tax, depreciation and amortisation - the writing down of the value of assets such as the aviation academy.
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Part of the reason for the creation of Norse, which provides services across the country including to County Hall, was so it could use profits to pay a dividend to Norfolk County Council.
But at the scrutiny meeting, County Hall's deputy leader Andrew Jamieson, said "for technical reasons", a company making a loss could not pay a dividend so it had to give a rebate instead.
Last year, the company, with its £300m plus turnover, gave a rebate - in the form of a discount on the services the council pays it for - of £2.7m.
Criticism of lack of transparency
Council leaders have said that is necessary for reasons of commercial confidentiality, so as not to give its competitors an advantage.
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At the scrutiny meeting, Dr Wood said some previous due diligence - the process of investigating and verifying information about a company or investment opportunity before committing to it - was not of the standard it would be if it was done today.
But Steve Morphew, leader of the Labour group at Norfolk County Council, said: "When you talk about the lack of due diligence and the lack of looking at the value of money, of course I am concerned about that.
"It worries me, that at this sort of scale, we are missing out on due diligence. I want to be absolutely certain that we have learned from that."
Dr Wood said there were new governance routines around investment decisions and when they come before the council or were decided by the Norse board or its executive.
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