A multi-million pound loan to Saracens rugby club could be a “risk too far” for the council, the Labour group has warned.

Barnet Council has agreed a £23 million loan to Saracens F.C. to help fund a new West Stand at the Allianz Park stadium in Copthall.

It is hoped the loan, which will be repaid over 30 years, will encourage people to take up sport and attract more businesses to the borough.

But at a full council meeting on Tuesday (October 30), Labour leader Councillor Barry Rawlings warned councillors they needed to be “wise investors rather than risky gamblers”.

He said: “Although any decision will involve risk, we must always bear in mind our stewardship of public money and the need to minimise and manage such risk.

“Also, this is proposed against a backdrop of continued austerity for local authorities and Brexit uncertainties. This has to be factored into a risk analysis.”

Cllr Rawlings asked what would happen if the rugby club collapsed and the council was left with a stand in a Green Belt location that it may be unable to develop.

He also raised concerns that inflation could erode any surplus on the loan, which has an interest rate fixed at 6 per cent.

Saracens made losses of £2.7 million in 2017, but the club’s financial health has been improving and it has a business plan to move out of the red.

The club also owes around £45 million in loans to other companies.

Cllr Rawlings issued the warnings as the council was asked to approve changes to its treasury management strategy that would enable it to make loans to “organisations operating in the borough that bring community benefits”.

Cllr Richard Cornelius, leader of Barnet Council, said: “I welcome the Labour Party’s support for the first two items and the half-hearted support for the stadium stand.

“But the Labour group really can’t have it both ways. If they vote against this, they are against Saracens and the benefits brought to the borough – and they are also dealing a serious blow to Middlesex University.

“I am surprised at Cllr Rawlings doing this.”

Labour councillors opposed the changes to the treasury management strategy, but they were approved after Conservative members backed the alterations.