Former Southend Council leader alarmed after discovering staff borrowed £10million without informing councillors

The former leader of Southend Council has expressed shock after discovering that while he was in administration council staff took out a loan of £10million without informing him.

Conservative councillor Tony Cox’s time as leader of the council came to an end in June due to a no-confidence vote, but it has been revealed that just days before that crucial vote a council officer borrowed £10million for the council’s finances without informing elected members.

Cllr Cox only found out when a quarterly financial report was published last week, and the council claims the purpose of the borrowing was to “improve cashflow”.

The Conservative leader said: “In the eyes of the public £10million is not an insignificant amount of money. It may be that it was a prudent decision, but to not be told is eye watering.

“Members of the public would expect that a leader of the council is made aware.”

Cllr Cox further questioned why the decision was made while the council was in turmoil and a no-confidence vote was expected just days later.

“The timing is surprising. This was on a Friday and on the Monday a full council was scheduled and it was not known if there would be a change of administration.

“These kinds of things are why I have repeatedly said the way council does politics has to change.

“I am not saying that this was below board but members should be told and the leader – no matter what administration – should be told. Taxpayers expect it.

Mr Cox’s concerns were echoed by Harry Fone, grassroots campaign manager at the TaxPayers’ Alliance.

Mr Fone said: “The worrying lack of oversight by council officials and executives is alarming to put it mildly.

“Many local authorities across the country borrow money but usually always for good reason and with a particular project in mind. The council must explain to local taxpayers why it has borrowed such a large sum.”

Despite the concerns being raised, that council has insisted that the borrowing was “normal practice” and said financial policies are approved by councillors.

A spokesman said: “Under the council’s treasury management strategy, which is written in compliance with the national code of practice and is approved annually by councillors as part of the budget setting process, the councils designated section 151 officer has the full delegated authority to undertake the borrowing and investment activities of the council.

“The section 151 officer must report the councils borrowing and investment performance on a quarterly basis to cabinet.

“Borrowing and investment decisions like this are taken with professional due diligence and are undertaken to manage the councils cashflow and whilst it is not aligned to a specific project, it is to fund the overall capital investment programme. This is standard practice and in line with proper accounting practice, and helps to manage the council’s overall financial position.”

Council leader Ian Gilbert said: “I think it would certainly expected that a leader is kept informed in broad terms regarding treasury management but I don’t think there is any reason to believe officers acted wrongly.

“The scheme of delegation and what officers can and can’t take is set by council and it is our decision to delegate that authority. I meet regularly with the head of finance and resources and I would expect him to keep me informed.

“But ultimately if you delegate authority you have to be prepared for it to be used.”

Steve Shaw

Local Democracy Reporter