Thurrock Council takes out huge loan to pay back other authorities and buy breathing space as it wrangles with financial catastrophe

By Neil Speight

4th Oct 2022 | Local News

THURROCK Council has been allowed to borrow £836 million to ensure it meets its obligation to pay back money loaned to it from local authorities, pension funds and other public bodies.

As reported on Thurrock Nub News earlier this month, a large number of councils are owed money by Thurrock which is due to be paid back before the year end.

The payback process to some of those councils, where concern had been expressed about Thurrock possibly defaulting on its loans, began recently – with Cambridge City Council being one of the first to get weighed in – to the tune of £15 million. As of today (Tuesday, 4 October), Thurrock Nub News understands £177.5m has been paid back - around a quarter of the total debt it accumulated to other public bodies.

In total it is believed Thurrock owed councils, pension funds and other authorities £678.5 million - borrowed to fund investments in 'green energy' companies. Many of those companies have either gone bust or are failing and unable to repay the bonds Thurrock bought to finance them. Nub News, which exclusely revealed the amount of Thurrck billion plus debt mountain in January 2021, understands that upwards of £100 million - and possibly as much as double that - could have to be written off.

In a bid to stave off any possible financial implications for other councils and public bodies should Thurrock not to be able to pay them back because of its failed investments, the government has brokered a deal with the Public Works Loan Board*, which amounts to Thurrock striking a new loan of £836 million. The additional £217.5 million is the money Thurrock already owed the board that has been written into the new deal.

It is not known at what rate of interest Thurrock has been able to borrow, but it is likely to be below current commercial rates. The new loan will run over a year - giving the council 'breathing space to get its house in order and come up with government approved plans to find a long term solution to its cash quandary.

However, it is still going to amount to a huge amount of interest – fresh money that effectively comes out of Thurrock council taxpayers' pockets on top of the hundreds of millions already lost, squandered or unaccounted for in the financial shambles that originated out of the council's controversial 'borrow to invest policy'.

The implications of that loss have been described as 'catastrophic' by the council's acting CEO Ian Wake who was recently appointed as the Government stepped in to stop the rot.

So while there is good news for many of the council listed below (together with the amounts they loaned Thurrock) who now know they will get their money and interest back, this is another more dire news for Thurrock Council – whose CEO Lyn Carpenter and finance director have both been put on leave while the commissioner appointed by the government continues to drill down into the quagmire of dodgy deals and deceit left behind.

The debt list of shame:

Guildford BC

Guildford invested £10m with Thurrock in March 2022 at a rate of 1.35%, with the loan maturing next March.

Exeter City Council

Exeter lent Thurrock £5m in a six month loan repayable in November 2022 at a rate of 1.2%.

Peterborough City Council

Peterborough has a £5m investment loan with Thurrock maturing on Monday 19 September.

Islington LBC

Islington's £15m investment with Thurrock is also due to be returned in November. It said in a statement that "inter-authority loans are common practice in local government."

Waverley BC

Waverley loaned Thurrock £10m in two tranches this year, both due in 2024.

Halton MBC

Halton has loaned Thurrock £30m, which according to investigative reporter Gareth Davies represents more than half of its local authority investments.

West Sussex CC

West Sussex loaned Thurrock £20m, half of which is due back at the end of this month, with the other loan maturing in August 2023.

Leeds

Invested £15m with Thurrock in March.

Newcastle City Council

Newcastle lent Thurrock £15m in two loans, both due back later this year.

Buckinghamshire Council

Buckinghamshire provided a one year, £10m loan to Thurrock in January.

Spelthorne BC

Spelthorne has lent Thurrock £10m in two £5m tranches, both due to be repaid in January 2023.

Tendring DC

Tendring has £6m invested in two loans to Thurrock, each of £3m and repayable in the next five months

Castle Point BC

Castle Point has lent Thurrock £3m, repayable May 2023

Maldon DC

Maldon has lent £2m to Thurrock, repayable in October 2022

Cambridgeshire & Peterborough CA

The combined authority has an outstanding loan to Thurrock of £5m, due to be repaid in March 2023

Somerset CC

Somerset loaned Thurrock £15m in three loans, all taken out this year and most recently in July

Wigan MBC

Wigan provided a £5m loan to Thurrock Council this July which is due to mature in January

Brighton & Hove

Brighton & Hove has two outstanding £5m loans to Thurrock, one to be repaid in October and the other in May 2023

Derby City Council

Derby City Council lent £7m to Thurrock in February with the money due to be repaid in January 2023.

South Derbyshire DC

The council has £5m invested in a loan to Thurrock set to mature in April 2023.

Sutton LBC 

Sutton currently has a £5m loan investment in Thurrock due to be paid back in November.

Herefordshire Council

Herefordshire has a £5m loan out to Thurrock with a maturity date of October 2022.

West Suffolk Council

West Suffolk has lent £5m to Thurrock in a loan due to be paid back in December 2022.

Horsham DC

Horsham has two loans outstanding to Thurrock, one for £2m and one for £3m, with both to be paid back next year.

*The Public Works Loan Board lending facility is operated by the UK Debt Management Office (DMO) on behalf of HM Treasury and provides loans to local authorities, and other specified bodies, from the National Loans Fund, operating within a policy framework set by HM Treasury. 

Related stories include:

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

The damned council: https://thurrock.nub.news/news/local-news/the-damned-council-government-outlines-details-some-of-the-failings-and-expresses-fears-that-other-authorities-may-have-to-pay-a-heavy-price-for-thurrock-councils-blundering-by-officers-and-senior-councillors-148909

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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