Firm run by close friend of Burnham to benefit from multimillion-pound grant

A property development firm run by a close friend of Andy Burnham will be a key beneficiary of a £20m taxpayer-funded “bailout” for a troubled film studios project, The Telegraph can reveal. Tim Heatley, who was invited to Downing Street when Mr Burnham became Prime Minister in July, runs Capital & Centric, the developer contracted to convert Liverpool’s derelict Littlewoods building into a £70m “Hollywood of the North”. The £20m lifeline, announced in Wednesday’s Budget, has been earmarked for the Liverpool City Region Combined Authority to fund the redevelopment, which the firm is delivering through its subsidiaries.

Capital & Centric has confirmed that it expects to benefit financially from the redevelopment, acknowledging that some of the £5.3m already spent on the scheme covered its development management fees. Mr Heatley and his wife hold a combined 50 per cent stake in Capital & Centric which he co-founded with fellow developer Adam Higgins in 2011. The funding comes despite the loss of the project’s two proposed “anchor” tenants and years of warnings that the scheme could leave taxpayers facing millions in losses.

It risks fuelling fresh accusations of cronyism against Mr Burnham, who is already facing scrutiny over £55m in public loans to companies controlled by Manchester City’s Abu Dhabi owner, approved at meetings he chaired as Greater Manchester mayor. Mr Burnham and Mr Heatley have a longstanding friendship. The pair co-founded the Greater Manchester Mayor’s Charity in 2019 and have worked together ever since, regularly appearing at fundraising events and Capital & Centric developments.

The Telegraph understands that their relationship and charity ties prompted Mr Burnham to declare a potential conflict of interest and step aside from chairing a 2023 meeting at which his mayoral authority approved a £12.6m loan to a Capital & Centric subsidiary. On Saturday, a Capital & Centric spokesman denied that Mr Heatley’s friendship with the Prime Minister had secured the latest funding, insisting neither he nor anyone representing the company sought Mr Burnham’s help or discussed Littlewoods with him during his leadership challenge or since he entered Downing Street.

The £20m award for the Liverpool project came from the Growth Mission Fund, established under Sir Keir Starmer, which is closed to applications from businesses. Only Cabinet ministers can nominate projects. The Chancellor selects recipients without scoring or ranking competing proposals, despite government guidance that grants should normally be awarded competitively to ensure value for money. The Telegraph understands that Mr Burnham was not the minister who proposed the project.

Downing Street sources suggested on Saturday that Mr Burnham was not “formally involved” in awarding the £20m capital grant and had kept a “degree of distance”. However, neither HM Treasury nor No 10 could confirm whether or not the Prime Minister’s relationship with Mr Heatley was assessed as a potential conflict of interest before the award was made. Treasury officials also declined to comment on how the Littlewoods project was selected given concerns over its financial viability.

There is no suggestion of impropriety on the part of the developer. Capital & Centric said discussions about funding the project began last year, before Mr Burnham’s leadership challenge. A delegation from Liverpool City Region Combined Authority and Liverpool city council visited No 10 in February to propose grant funding, but nobody from Capital & Centric attended, the company said. A spokesman said the scheme had always required public support to bridge its funding gap, adding: “It isn’t a case of bailing out a previously viable project.”

On Saturday, opposition parties challenged Mr Burnham over the award. Richard Tice, Reform UK’s deputy leader, told The Telegraph: “While working Brits are told to tighten their belts, Andy Burnham is increasingly embroiled in serious sleaze allegations.” He added that: “The Prime Minister needs to explain how his Government came to earmark £20m for a project being developed by a friend’s firm.” Built in 1938 to serve as the headquarters of the Littlewoods football pools empire, the Art Deco building has stood empty since 1994.

Liverpool city council owns the freehold, while Capital & Centric (Rain) Ltd holds a 35-year lease. Another subsidiary, Capital & Centric (Regeneration) Ltd, was named in a development management agreement, with construction management fees included in the publicly funded budget. Combined Authority accounts record £5.3m spent under “Littlewoods C&C” in 2023-24 and 2024-25. A spokesman for the firm said that only a portion of this was paid to the developer in fees, with the majority spent on wider project costs.

The council also agreed to write off £1.6m plus interest owed by the developer and reimburse up to £900,000 of its previous project costs. It retains the right to regain control of the leasehold for £1 once the development is finished and contractual obligations are met. Kris Brown, a Liverpool Liberal Democrat councillor who raised concerns about the scheme’s financial risks five years ago while serving on the council’s audit committee, welcomed the cash injection to “finally get this project off the ground”.

However, he added: “Let’s be clear: we are only waiting on this government bailout today because the risks I highlighted years ago were completely accurate.” In 2021, Liverpool city council warned that the scheme had a “greater than usual risk profile” and could require further public money to cover losses. Mr Brown told The Telegraph that public money could disappear into a “bottomless pit of repairs”. “If we’ve got £20m of public funds, money will spiral and spiral,” he said.

In an interview published on July 7, Mr Heatley was described as “one of Andy Burnham’s closest associates” and separately named among those believed to be in the incoming Prime Minister’s inner circle. “I’ve worked with him for several years. Working with Andy can be great fun. It can also be infuriating because he’s so persuasive,” he said. After Wednesday’s Budget, Mr Heatley celebrated the award on Instagram. “It’s been a long time coming as a project,” he told followers.

“Now we can finally get cracking.” Capital and Centric said the Government would not release the £20m until further due diligence had been completed and the remaining funding secured. Liverpool city council forecasts the completed development could create 630 permanent jobs and generate £56m in annual economic activity. A government spokesman told The Telegraph: “The Government is continuing to invest in growth and regeneration across the England via the Growth Mission Fund.

“This includes £20m towards the restoration and redevelopment of the long-derelict Littlewoods site in Liverpool into a 260,000 sq ft creative campus for film, TV, gaming, immersive technology and digital screen industries.” Every Growth Mission Fund project undergoes formal checks, ensuring no conflicts of interest, Ministerial Code compliance and legal risk, and must pass a full business case before any funding is released.