On 24th July 2025 the Competition Appeal Tribunal (CAT) ruled in favour of the Greater Manchester Combined Authority (GMCA), Aubrey Weis v Greater Manchester Combined Authority ([2025] CAT 41), in a landmark case testing the Subsidy Control Act 2022 in the context of local authority lending.
GMCA had approved two major loans under its Greater Manchester Housing Investment Loans Fund for landmark city centre towers: the 60-storey Trinity D1 with 532 apartments and the 50-storey Contour with 494 apartments. Initially approved at £70.8 million and £69.2 million respectively, the facilities were finalised at £60.7m and £59.3m, with Renaker Group borrowing capped at £120m.
The interest was set at the EU Base Rate of 5.65% plus a margin (between 2.00%-2.65%) in addition to arrangement and loan management fees. Loan-to-Value (LTV) ratios were well below the fund’s usual 50% limit and security included first charges on the development sites, share charges over the Special Purpose Vehicles (SPVs), and additional property worth millions. From GMCA’s perspective, these were low-risk, income-generating loans that would recycle capital back into housing delivery.
The challenge
For the claimant, developer Aubrey Weis of Weis Group, they were something else entirely. He argued that no commercial market operator would have lent on these terms. He said margins were informally agreed at a meeting before any formal governance process, that GMCA had not benchmarked its rates against private lenders or sought an independent view, that its exposure to Renaker was excessive at £615 million committed by late 2024, and that the projects’ viability had been questioned in other contexts.
He pointed to paragraph 15.64 of the Statutory Guidance, which states:
“Any evaluation of compliance with the CMO should be undertaken with input from experts with appropriate skills and experience. In cases where the commercial assessment is not straightforward, it is recommended that public authorities commission a reputable third party to conduct a report as evidence that the actions proposed to be taken are in accordance with the Commercial Market Operator (CMO) principle (as it would be in the case, for example, of co-investment with private operators on the same terms or the procurement of goods and services in accordance with public procurement rules).”
GMCA’s defence
GMCA’s case was that its processes were rigorous, with applications passing through an experienced Investment Team, an external Gateway Panel and a Credit Committee before reaching the Combined Authority. It had decades of collective development finance experience, current market intelligence from its own portfolio and recent comparators from joint lending, notably a 2021 “club loan” with the Greater Manchester Pension Fund where they commissioned a third-party to verify market-rate compliance. Indicative rates were discussed with Renaker early, but always subject to due diligence and committee approval.
Tribunal decision
The Tribunal sided with GMCA. It found the relevant “subsidy decision” was taken on 22nd March 2024 when the loans were approved in principle, and that the final agreed terms in November were well within what could be expected in the market. Low LTVs, strong security, sales covenants and the forward sale of Trinity D1 made these loans low risk, and margins plus fees were not manifestly low. The Tribunal noted GMCA “could have done more” by benchmarking or commissioning an independent report, but in its unique circumstances there was “no doubt” the loans complied with the commercial market operator principle. The authority’s depth of in-house expertise and track record meant the absence of an external report was not fatal.
Wider implications
For GMCA, the outcome was a vindication. For other authorities, it is a warning. Very few have a 25-person investment team, a decade of profitable lending to draw on, and recent independent comparator evidence from past transactions. Without that capacity, the absence of a third-party report leaves a funding decision far more exposed to challenge. Even where a case is won, the time, cost and distraction of defending it can be significant.
Paragraph 15.64 of the Subsidy Control Guidance is explicit. In cases where the commercial assessment is not straightforward, public authorities should commission a reputable third party to produce a report evidencing compliance with the CMO principle. For most local authorities, every loan will fall into that category. Borrowers are unique, projects carry market risk, interest rate conditions shift and truly comparable deals are rare.
Arlingclose provides the type of independent interest rate and terms benchmarking that the Guidance envisages. Our reports analyse live market data, comparable transactions and apply the statutory Subsidy Control Regulations to document why the terms are, or are not, those a commercial lender would offer. Commissioning this analysis before approving a loan creates the audit trail that can deter challenges and defeat them if they come.
GMCA’s win shows it is possible to defend a case without a third-party report, but only if you already operate at the scale and sophistication of a professional development lender. For everyone else, independent evidence is not just good practice. It is a necessary route under the Subsidy Control Act, and often the difference between a quick, confident decision and a protracted legal fight.
For independent third-party reports that evidence compliance with the Subsidy Control Act and help your authority to avoid costly legal challenges, please contact us at pmarshom@arlingclose.com.
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