Councils continue to reveal where borough debt lies but they are confident cash will be repaid. But at what cost to Thurrock on the back of bungling councillors?
COUNCILS across the country have been revealing how much they are owed by cash-strapped Thurrock Council.
The local authority's financial affairs are now being supervised by neighbouring Essex Council after the government stepped in as the council imploded under the weight of its flawed 'borrow to invest' policy and other financial and administrative mismanagement.
The lack of integrity in Thurrock Council's financial mismanagement as its senior officers face investigation and the double-speak of leading councillors highlighted is remarkable.
For example, the council's current finance portfolio holder Cllr Jack Duffin, who has remained tight-lipped while events around him unfold, is damned by his own historic quotes.
Cllr Duffin, who was first elected as a UKIP councillor, then switched to the Thurrock Independents before declaring his allegiance to the ruling Conservative group - for which he was rewarded with a hefty increase in his council allowance - once damned the council's financial policy, particularly the 'borrowing to invest policy' which he later became an ardent fan of.
In September 2016 when he was UKIP's shadow finance portfolio holder Cllr Duffin said he was "deeply disappointed" with the decision to invest £15 million in a solar farm in Swindon and accused the Tories of using Thurrock taxpayers' money to hike up energy prices.
He said: "This investment is deeply unethical. Energy generated in this way is expensive and it is a fact that the 'green energy' agenda has pushed millions of working households into fuel poverty."
"A new fuel poverty grant should be set up in Thurrock in which half these profits will be ring fenced and spent on helping the poorest people harmed by this ill-considered energy policy."
Later, he completely turned about face and urged the council to spend millions more!
Today (Wednesday, 14 September) he was due to present a report to the council's cabinet announcing its failings in the first quarter of the year when it had to use up more than five million from its rapidly depleting reserves just to pay its bills.
However, in line with advice and protocol the meeting has been cancelled, perhaps to a sigh of relief from accountable councillors.
Nevertheless, a behind-closed-doors meeting will take place tomorrow when the future of its senior officers is to be debated at a general services committee.
Critics might say the council, despite repeated pleas that it believes in transparency, continues to wash its dirty linen in private. An imminent full council meeting next Wednesday (21 September) offers an opportunity to challenge those critics.
One councillor whose name repeatedly crops up as a steadfast supporter of the scheme to borrow millions is former finance portfolio holder Cllr Shane Hebb.
He stood down from the finance portfolio role in May, perhaps wary of the storm to come.
Nevertheless he had been at the forefront of the borrowing policy for years, and repeatedly told the public, the media and council critics that things were fine and there was nothing to be concerned about.
As far back as 2016, when he was in conflict with Cllr Duffin over the Swindon borrowing, he assured residents the future was secure and there was nothing to worry about.
He said people in Thurrock could "rest assured we are looking after their money."
And added: Thurrock is a pro revenue generating council and this is exactly the sort of project we want to be involved
"We will continue to look for similar opportunities and invest when the advice says we will get a good return for residents."
"Not only are we looking after people's money, we are also doing our bit to help protect the environment by reducing the amount of carbon produced by burning fossil fuels."
The Swindon deal was brokered by controversial finance advisor Liam Kavanagh, a man who has soaked up around £138 million in cash from Thurrock coffers.
Flamboyant, globe-trotting businessman Mr Kavanagh has been widely condemned for his financial juggling acts and was damned by a High Court judge as unreliable and untrustworthy.
Mr Kavanagh's advice and his companies are flawed. Thurrock is still unable to receive a substantial proportion of the interest from its investments connected to Mr Kavanagh's companies, with £12.5 million due last February remaining outstanding. Tens of millions more is due to be repaid but that seems highly unlikely.
The council is reliant on that income to balance its books – hence the crisis. It is believed the council could end up losing £200 million of the £655 million it loaned to Liam Kavanagh's businesses – roughly the same as its annual budget.
Cllr Hebb is another who has said nothing since news of the council's predicament was finally admitted and the government stepped in, sparking a welter of publicity and concern.
That concern has spread to a large number of local councils, to whom Thurrock could be in total debt of up to £900 million.
Among these is Derbyshire County Council and the fund it administers, the Derbyshire Pension Fund.
The county council itself has invested a combined £30 million in loans to Thurrock, made up of three £10 million tranches all transferred in April and due to provide returns in April 2023.
Meanwhile, the Derbyshire Pension Fund, has transferred loans totalling a further £30 million to Thurrock, with a string of six £5 million loans throughout 2022 and one as recently as August 31, with some due to mature later this year and into early 2023.
Brighton and Hove City Council is another that is owed money that is due to be repaid - around £10 million.
And at least £11 million is owed to other local authorities in Essex. Castle Point is owed £3m, Maldon is owed £2m and Tendring is owed £6m. Additionally, Colchester and Brentwood borough councils have investments in Thurrock Council but have not disclosed how much.
However, despite levels of concern and possible delays in repayment, most councils believe they will get their money back – though that is likely to be at some cost to Thurrock council tax payers.
A spokesperson for Brighton Council said: "Councils are ultimately government-backed. This means there is no risk of default. The loans will definitely be repaid.
"We were aware when we made the loans that concerns had been expressed about Thurrock's financial situation.
"However, there was no risk that this would have any bearing on them repaying their loans. Even councils in severe financial difficulties always have to repay their loans."
And a spokesperson for Castle Point said: "Castle Point Borough Council has lent £3m to Thurrock Council which is repayable in May 2023. This investment is secured on the revenues of Thurrock Council and not on any specific project. "This investment is secured on the revenues of Thurrock Council and not on any specific project.
"Inter authority loans such as this are secured on the revenue of the borrowing authority and are the most secure form of investment available to Castle Point Borough Council.
"There has never been a case where there has been a default on the inter authority, local authority borrowing."
That may be true. But the reality is that Thurrock will have to borrow the money to pay them back.
Whether they will be able to get the cash they need from the low-rate Public Works Loan Board is a moot point. At one point such a thing would not have been considered by the government but times change and it might be allowed – though undoubtedly it will be with interest that just adds to overall losses.
And if the council has to go to the commercial market – then the costs will be even higher.
Also see:
Call for drastic change: https://thurrock.nub.news/news/local-news/in-the-wake-of-a-calamatous-week-thurrock-labour-leader-calls-for-drastic-change-responsible-councillors-to-quit-and-for-a-new-chief-executive-149450
MP expresses concern over council's dire position. https://thurrock.nub.news/news/local-news/borough-mp-pitches-into-concern-over-thurrock-councils-dire-financial-position-and-lays-the-blame-largely-at-the-door-of-officer-cohort-149010
Government tells of 'serious allegations' made against Thurrock council: https://thurrock.nub.news/news/local-news/government-tells-of-serious-allegations-that-led-to-drastic-action-and-intervention-in-thurrock-councils-financial-affairs-148829
Fobbed off and lied to!: https://thurrock.nub.news/news/local-news/opposition-leader-welcomes-change-but-damns-council-after-he-and-media-were-stonewalled-ignored-falsely-reassured-lied-to-fobbed-off-and-misled-148768
Council leader quits: https://thurrock.nub.news/news/local-news/council-leader-quits-as-mismanagement-and-misreporting-of-its-financial-affairs-is-confirmed-148737
Media get the blame: https://thurrock.nub.news/news/local-news/media-coverage-has-not-helped-council39s-financial-position-says-thurrock39s-financial-guru-who-has-borrowed-hundreds-of-millions
Dodgy dealer damned by judge: https://thurrock.nub.news/news/local-news/judge-damns-man-who-handled-hundred-of-millions-of-thurrock-council-cash-and-investments-plus-he-pocketed-5-million-for-his-dodgy-dealing-council-says-it-is-39carefully-considering39-the-matter
Council battles to keep its secrets: https://thurrock.nub.news/news/local-news/council-battles-on-to-keep-its-controversial-financial-dealings-a-secret
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